Sir James Crosby, as we must still call him until the knighthood is removed formally, has done the right thing – but belatedly.
It would have been more stylish for him to volunteer to give up his gong soon after HBOS collapsed into the arms of its foolish rescuer, Lloyds TSB, complete with state-funded bailout in late 2008. Instead he waited almost five years until the outside world, via the excellent report from the parliamentary commission on banking standards, woke up to the self-inflicted nature of HBOS's failure. If it is a nonsense today to wear an award for "services to the financial industry" it was also a nonsense from 2009 onwards.
But let's not be too churlish. Crosby deserves credit for volunteering, even if it is in the context of political heat that was still red-hot. David Cameron had little appetite to press the matter, but many MPs from all three main political parties did. The row was not going away. Unlike Fred Goodwin, Crosby has taken the initiative and retrieved some dignity.
As for his pension, a 30% reduction is a meaningful gesture. Yes, of course, Crosby won't be discomforted one jot by having to rub along on £406,000 a year instead of £580,000. But the pension, as Crosby says, was a contractual entitlement; and not all his pot was accumulated during his years at HBOS. If a 30% cut was deemed satisfactory in Goodwin's case (and, note, he took a £2.6m tax-free lump sum before adjustment), it is reasonable to use the same yardstick.
Some will argue Crosby has been harshly treated; that he and HBOS were merely creatures of the political, banking and regulatory climate of the time; that the removal of knighthoods has become arbitrary and the honours system itself is damaged that way.
It's certainly true that Crosby and HBOS and all the other banks were egged on by the Labour administration (and there weren't many Tory dissenters either). And it's patently the case that the Financial Services Authority was asleep on the job – or, rather, that it failed to heed its own warnings since, as the commissioners' report informed us, it had described HBOS as "an accident waiting to happen" in 2004.
But, come on, it's absurd to conclude that the shortcomings of Crosby, his successor, Andy Hornby, and his chairman, Lord Stevenson, are excused by a gentle political and regulatory environment. If you are running a large bank your first duty is to make sure the institution doesn't go bust. If you fail in that duty, there's no point blaming political cheerleaders or pleading that the regulator should have stopped you. You have to look in the mirror, as Crosby now has.
Indeed, in the case of HBOS, the parliamentary report made an overwhelming case that the bank would have become insolvent even if liquidity in the wholesale market had not evaporated after the Lehman's collapse. It was an old-fashioned case of bad lending. In the circumstances, an award that honoured Crosby's exceptional achievement looked ridiculous.
Is the system itself discredited if knighthoods can be removed for mere incompetence rather than wrong-doing? Frankly, the honours system has always been rotten in the way it hands out gongs to business people and bankers in the middle of their careers. As argued here the other day, it's a recipe for mutual back-scratching and the trading of favours.
Best to wait until the final whistle – meaning when careers are over – before handing out prizes.
guardian.co.uk © Guardian News and Media Limited 2010