The financial crisis of 2007/2008 shook the British economy to its foundations. In the face of what became know as the "credit crunch", bank after bank found itself stretched. Some would have failed had they not fallen into the arms of the taxpayer - at staggering expense to the public.
In the immediate aftermath of the crisis the Chancellor,George Osborne and Vince Cable (then Business Secretary) asked Sir John Vickers to lead a review of the banking sector. In September 2011, Sir John's Independent Commission on Banking (ICB) reported back with a series of reforms designed to make the banking system safer and less dependent on state bailouts.
The Bank of England is now in charge of regulating Britain's banks and, in a rather devastating intervention, Sir John Vickers has basically accused it of going soft on the sector.
Back in 2011, two of the ICB's key recommendations were that:
1) banks "ring-fence" their traditional retail deposits and conventional lending from their riskier operations.
2) that the biggest (and therefore the most risky) ring-fenced banks should be required to hold back an extra layer of capital - known as a "Systemic Risk Buffer" - to offset the risk of the loans they make and, if necessary, absorb losses.
The ICB set the additional Systemic Risk Buffer at 3% of a bank's Risk Weighted Assets and intended it to apply to six of our biggest lenders. Last month the Bank of England decided not to apply it to any, a decision that has clearly upset Sir John.
"The wisdom of this policy is questionable," he writes in an article for the Financial Times.
This is biting criticism. Sir John is basically accusing the Bank of England of failing to implement what the ICB recommended. There's no suggestion of anything underhand - the Bank has publicly set out its justifications, it's just that Sir John Vickers believes they are weak.
The logic of asking banks hold back extra capital is simple: well capitalised banks are more resilient, less likely to take risks and therefore less likely to need rescuing.
Unfortunately, a more prudent bank is also a less profitable bank and so these reforms have been furiously lobbied against by the lenders themselves who want the freedom to make higher returns on equity.
"Sir John Vickers is a man of great intellectual integrity," Vince Cable has told ITV News.
The Bank of England points out that one of Sir John's concerns do not seem to be shared by one of his colleagues on the ICB, Martin Taylor (now a member of the Bank's Financial Policy Committee).
Mr Talyor's evidence to MPs on the Treasury Select Committee recently was much more upbeat. The Bank also says its proposals on the Systemic Risk Buffer are in the process of being consulted on until April 22nd - at least it now know Sir John's mind.
You may recall, just before Christmas the Bank of England revealed that all seven of our biggest lenders had passed its stress-tests. The Bank had modeled a disaster scenario of a collapse in oil prices and a severe slowdown in China and the Eurozone - and our banking system pulled through.
The Governor of the Bank of England, Mark Carney, presented the moment as a tipping-point of sorts, the "long march to ever more capital" we were told had "come to an end."
Since then shares in Banks, British and foreign, have fallen and with some velocity, as anxieties about their ability to cope with precisely the disaster scenario the Bank of England tested in the lab have returned.
Our banks are safer than they were in 2008 but they are not safe and Sir John Vickers clearly feels the Bank of England is not being exacting enough.