A report has accused bailed-out British bank HBOS of being so badly run it was doomed to fail even without the 2008 financial crisis.
The Parliamentary Commission on Banking Standards said in the report issued on Friday that former HBOS executives were to blame for the collapse of the bank and and the regulator should consider banning them from the industry.
The commission, entrusted with finding ways to reform UK banks, said in the report An Accident Waiting To Happen that bad lending and losses across the business were likely to have led to its insolvency even without the funding and liquidity problems of the financial crisis.
The review said that regulators bore some of the blame, but it attacked the state-rescued group's ex-chairman, Lord Dennis Stevenson, and two previous chief executives, Sir James Crosby and Andy Hornby, for a "colossal failure" of management in pursuing a high-risk strategy that caused its downfall in 2008.
The parliamentary panel blamed the men's "toxic misjudgements" for a collapse which sparked a vast £20.5bn ($31bn) taxpayer bailout and government-engineered takeover by rival Lloyds of Britain's biggest mortgage lender.
"The primary responsibility for the downfall of HBOS should rest with Sir James Crosby, architect of the strategy that set the course for disaster, with Andy Hornby, who proved unable or unwilling to change course, and Lord Stevenson, who presided over the bank's board from its birth to its death," the panel said.
"Lord Stevenson, in particular, has shown himself incapable of facing the realities of what placed the bank in jeopardy from that time until now."
The three men earned millions during their time at the bank and in subsequent roles.
Crosby was paid almost $12m during his tenure as HBOS's chief executive. Hornby earned $2.9m a year at the bank and Stevenson's package was valued at more than $1.2m a year.
Crosby resigned on Friday from his role as a member of the European Advisory Board at private equity firm Bridgepoint in the wake of the report.
HBOS was created in 2001 by a merger between Halifax, a former mutually owned savings and loans firm, and the 300-year-old Bank of Scotland.
It stepped up lending using cheap funding on the wholesale markets rather than safer customer deposits, and its high-risk strategy was exposed when that funding dried up after the collapse of US investment bank Lehman Brothers in 2008.
HBOS's managers blamed the financial crisis for the collapse, but the panel said the bank's business model was inherently flawed and its board was a "model of self-delusion".
Andrew Tyrie, commission chairman and Conservative politician, expressed surprise that only Peter Cummings, who was head of corporate lending at HBOS, had so far been punished.
"The sums would never have added up," Tyrie said.
"The commission has estimated that, taken together, the losses incurred by the corporate, international and treasury divisions would have led to insolvency, regardless of funding and liquidity problems, had HBOS not been bailed out by both Lloyds and the taxpayer."