The run on Northern Rock could have been prevented if Gordon Brown, in his days as Chancellor, had heeded pleas from the Bank of England to change to a law establishing a mechanism to safeguard deposits when a bank was heading into trouble.
Mervyn King, governor of the Bank of England, who has been criticised for failing to act sooner to help Northern Rock, stopped short of blaming the Prime Minister personally for failing to take the Bank's advice.
But in an interview with the BBC he made it clear that if the Government had legislated to set up such a procedure, he would have used it to forestall the run on Northern Rock in September.
Mr King also made it clear that he approved of Chancellor Alistair Darling's refusal to underwrite a possible bid for Northern Rock by a British bank - believed to be Lloyds TSB - with a £30 billion Government loan for two years at a commercial, not punitive, rate of interest.
"I said to the Chancellor 'This is not something which a central bank can do'. They don't normally finance takeovers by one company for another, let alone to the tune of £30 billion, which is rather a large amount of money.
"So I said 'This is a matter for government, but you have to recognise that if you were to make available such a facility to one bank, you would have to make it available to any other potential bidder and therefore it will become public'."
The Treasury denied that Mr Darling vetoed any such plan. It never amounted to more than a "general inquiry", which was not followed up by any detailed proposal, a spokesman said.
Mr King made no mention of the Financial Services Authority's role in the affair, about which the Chancellor expressed reservations giving evidence to the Commons Treasury Select Committee.
Asked what, by hindsight, the Bank might have done differently, Mr King said: "We would have pressed even harder - and we did press pretty hard - to inject some urgency into the need for new legislation to enable there to be a procedure for pre-emptive intervention in banks in the form of deposit insurance."
Had such a facility existed, the Bank would have found it "very attractive", the governor added.
"If we had had that power that is something I am sure we would have exercised," he said, "because that is something that would have prevented a retail run on the bank. We don't have that power in Britain and we need it."
Mr King warned that although things have improved since August there could still be more trouble to come. It will take a few months still for banks to reveal their full losses arising from US sub-prime mortgages.
"I think most people expect that we have several more months to get through before the banks have revealed all the losses that have occurred, and have taken measures to finance their obligations that result from that, but we're going in the right direction," he said.
He denied that his refusal to join other central banks in injecting huge sums into the financial system had exacerbated the crisis and caused the run on Northern Rock.
"The role of the Bank of England is not to do what banks ask us to do," Mr King insisted. "It is to do what is in the interests of the country. And we took the view that bailing out those banks that have taken the biggest risks will provide no incentive in the future to prevent this happening all over again.
"They have the ability to cope with this crisis - not without losing money, not without losing bonuses and in the case of individuals, not without losing their jobs - but nevertheless, it is not a threat to the banking system as a whole."
Mr King rejected suggestions that Northern Rock would have escaped trouble if it could have used the extra liquidity provided by the European Central Bank.
"If you look at what the ECB lent to banks through their auctions that they conducted, relative to the size of the banking system they lent an average of £230 million per bank participating in their auctions. Northern Rock needed something closer to £25 billion," he said.
