Sir James Crosby has resigned as deputy chairman of the City watchdog, the Financial Services Authority (FSA).
The move follows allegations that, during his time as head of HBOS from 2001 to 2006, he sacked a whistleblower, Paul Moore who had raised concerns the bank was exposed to too much risk.
Sir James insists that Paul Moore's allegations were investigated at the time and found to be "without merit." However, as the BBC's Business editor Robert Peston argues convincingly here, in terms of the big picture, "No one in their right mind would deny" that Paul Moore was right and Sir James and the HBOS directors were wrong. "HBOS was lending too much."
There seem to have been an extraordinary number of people connected with the Labour government who have included in their resignation statement the claim that they have done nothing wrong, and Sir James is the latest in a long line to do so. There is no evidence that Sir James broke any law or regulation, and in that sense he is telling the truth. But it is difficult to disagree with Robert Peston that he made "a disastrous judgement."
This is what David Cameron has to say on the subject:
"This morning we learnt that Sir James Crosby had resigned from his position as Deputy Chairman of the City watchdog - the Financial Services Authority. This was because of an allegation made about his time as Chief Executive of HBOS. A former employee claims Sir James Crosby sacked him for saying that the bank was taking on too much risk.
Why is all this so important? For three reasons. First, because it raises questions about Gordon Brown's judgement. Sir James Crosby is one of his trusted economic advisers and the man he put in place to oversee the regulation of our banks. The turn of events now shows Gordon Brown's misjudgement in putting him in such an important role.
Second, it raises questions about Gordon Brown's character. In the House of Commons today, I asked the Prime Minister to apologise for getting this judgement call wrong. But, as ever, he refused. Be it for claiming to end boom or bust, failing to regulate our banks, or now this, the Prime Minister is simply unable to admit when he's got things wrong - so I don't believe he can be the man to put things right.
And third, it raises questions about the way this Government works. The immediate events leading up to Sir James Crosby's resignation are still not clear. Was it his decision? Or was he pushed in order to make life easier for the Government? Whatever happened, I suspect this will not be the last of the resignations we see to save this Government's political skin.