Sir James Crosby was Banquo’s ghost at the Treasury Select Committee – he wasn’t there physically and nor was he mentioned directly by name.

However, he is almost certainly the biggest casualty from yesterday’s session, having been fingered in written evidence – extracts of which were dramatically read out by one of the committee members, Andrew Tyrie – for having personally sacked the former head of risk at HBOS when he dared to speak out about the way the bank was being run.

The unmasking of Sir James, one of Gordon Brown’s top City advisers, for his culpability in Britain’s banking meltdown is long overdue. There is still amazement in the City at the miracle of timing that had Sir James step down from HBOS in July 2006 in favour of the much maligned Andy Hornby – a hospital pass if ever there was one. For it was the Yorkshireman Sir James – whose knighthood in 2006 is thought to have been on Mr Brown’s recommendation – who devised the business model that brought HBOS to his knees.

Furthermore, from the creation of HBOS in September 2001 from the merger of Halifax and Bank of Scotland, it was he who implemented that strategy until he stepped down.

Mr Hornby, by contrast, ran the bank only for its final two years – during which time, as he pointed out yesterday, most of his energies were being devoted to preventing Sir James’s runaway juggernaut from running off the road.

Skilfully blaming Sir James, without once naming him, Mr Hornby recalled to the committee how, on taking over at HBOS, he had immediately halted a share buyback programme to preserve capital, slammed the brakes on new mortgage lending – cutting the bank’s net share of new lending from 25 per cent to 8 per cent – began cutting its exposure to the short-term wholesale markets and put more emphasis on attracting more deposits. He added: “Over many years the reliance on wholesale funding left us in a vulnerable position.”

While Mr Hornby was trying to undo his work, though, Sir James – an Oxford maths graduate and qualified actuary – was wasting little time in becoming a member of the great and good. A month after leaving HBOS he was named as chairman of a task force set up by Mr Brown. who was still Chancellor at the time, on how the Government might win public trust in its identity card scheme.

A year later Sir James, who had accrued a pension pot worth more than £9 million when he left HBOS, was named deputy chairman of the Financial Services Authority – which, ironically, is the key regulatory body supposedly in charge of monitoring risk.

Then, in April last year, Alistair Darling put Sir James in charge of an emergency review of the mortgage market – asking him to come up with proposals on how to unfreeze it. Sir James duly obliged with a call for £100 billion worth of government guarantees for mortgage-backed securities. He may now face questioning from the select committee himself. The damning written evidence given by Paul Moore, the former HBOS head of risk fired by Sir James, suggests that he certainly deserves to.

The man responsible for the Halifax adverts featuring Howard the singing banker had, until yesterday, avoided any blame for the collapse of HBOS. Now he is well and truly in the spotlight for his role in the affair – and that could make things very embarrassing for his political master, Gordon Brown.

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