Mervyn King, the Governor of the Bank of England, has said that financial regulators were unable to stop City banks taking huge risks because they did not get support from the British Government and MPs.
Regulators who had criticised banks lending in 2006 or 07 would have had "a massively difficult task" persuading politicians to back them.
"They would have been seen to be arguing against success," said Mr King.
Suggesting that politicians were in thrall to powerful banks, Mr King said any regulator who challenged the banks would have been left isolated and "lonely. "
Institutions would have said "'who are you to be saying we are taking big risks? How dare you tell us we should stop taking such risks, can you prove to us that the risks we are taking will necessarily end in tears' - and of course they couldn't".
Just as with the continuing hullaballoo over Fred Goodwin's pension, this kind of thing seriously undermines Downing Street's tough spin on banks.