"The culture within parts of British banking has increasingly been one of risk-taking, leading to the meltdown that we have witnessed," said Mr McFall.
The MPs said they favoured greater regulation to protect bank depositors. And they called for further consideration of the idea of separating High Street retail banking from the more commercially risky investment banking.
They supported the government's approach of taking a direct stake in banks that were being rescued with the help of taxpayers' money.
John McFall MP: Prudence 'was missing'
But the MPs said that the details of the bank investments being guaranteed under the recently launched asset protection scheme should be disclosed, with the public being told what the assets are, how much they are worth and how much value they might eventually lose.
"The repercussions of this banking crisis are being felt, and will continue to be felt, by ordinary people for many generations," Mr McFall said.
"Looking to the future, the rebuilding of consumer trust is key."
Small business lending
As well as criticising the behaviour of banks in the past few years leading up to the start of the international financial crisis, the MPs also criticised their current lending polices.
The MPs held several sessions outside London and they were told that, contrary to the claims now being made by banks, many small businesses were finding it very hard to obtain loans, except with much higher charges and fees.
The committee deplores the behaviour of a number of those banks who have received so much public money and behaved in such an insensitive manner
"The committee deplores the behaviour of a number of those banks who have received so much public money and behaved in such an insensitive manner, particularly to established customers," said Mr McFall.
"There is clearly an unresolved inconsistency between, on the one hand, bankers' assurances that they are increasing their lending and, on the other hand, widespread and clearly sincere complaints that credit is difficult to obtain and increasingly expensive," he said.
The British Bankers Association (BBA) replied that anecdotal evidence from disgruntled bank customers having a hard time in the recession had not given the MPs an accurate picture.
Figures on Friday from the BBA showed that lending by High Street banks to small businesses rose by£271m in March.
"The stock of lending to small businesses is around 5% higher than a year ago and has risen in each of the first three months of 2009, reflecting general banking support and individual bank pledges to make finance available," said BBA statistics director David Dooks.
Deposits by small businesses grew £881m in March.
One organisation praised by the MPs was the Financial Services Compensation Scheme (FSCS).
The committee said the scheme had developed a number of "innovative solutions" to deal with the collapse of several banks in the UK.
But the MPs said banks should make it clear to their customers exactly which of their subsidiaries carried separate deposit protection.
And they recommended that each brand name run by a bank should have a separate banking licence, which would trigger such cover.
The committee also appears to be showing due deference to the governor of the Bank of England, says BBC business editor Robert Peston.
They will not dismiss his view that a separation of retail from investment banking functions is very attractive, but nor do they sign up for it, our correspondent says.
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