Sir James Crosby has quit as deputy head of the Financial Services Authority after allegations he sacked an executive who warned about excessive risk taking when was head of HBOS.
What is the row about?
Britain's biggest mortgage lender HBOS, which was rescued from near collapse last year, is accused of ignoring warnings by one of its own executives that it was taking excessive risks with depositors' money. The whistleblower, Paul Moore, claims he was sacked in 2005 by the bank's then chief executive Sir James Crosby for raising these concerns and replaced by someone with no experience in risk management. The bank firmly denies this and say Mr Moore was made redundant as part of a restructuring process. His replacement was someone with 20 years banking experience, it adds.
What has it got to do with Gordon Brown?
Until earlier on Wednesday, Sir James Crosby could count himself as a key economic adviser to Gordon Brown. But Mr Brown publicly distanced himself from the former bank chief in the Commons, as he sought to limit the political damage caused by the row.
Why does it matter?
If Paul Moore's allegations are true, it would mean Gordon Brown has been seeking advice on how to get the country out of the financial mess it is in from someone whose reckless behaviour was responsible, in part, for creating that mess. The Tories say this would call his judgement into question, although it should be pointed out that Sir James firmly denies Mr Moore's claims.
Who is Sir James Crosby?
One of the biggest names in the City. A former actuary and fund manager who rose through the ranks to be chief executive of Halifax, and then became the first chief executive of HBOS after its merger with Bank of Scotland in 2001. He helped engineer the business model which propelled the newly-created group to vast profits and, his critics argue, sowed the seeds of its eventual downfall. He quit HBOS in 2006, handing over the reins to 36-year-old high flyer Andy Hornby. He received a knighthood in the same year - reportedly on the personal recommendation of Gordon Brown - for services to the financial services industry. He is also non-executive director of ITV and Compass Group and a trustee of Cancer Research UK.
What was his role at the Financial Services Authority?
He was the deputy head of the organisation, which was set up in 1997 to regulate Britain's rapidly expanding financial services industry. Critics say it is to blame for being "asleep at the wheel" as the banks took ever greater risks with depositors' money. After a brief sabbatical, Sir James took on his role with the FSA in 2006.
What did he do for the government?
A month after leaving HBOS in 2006, Sir James was named by Gordon Brown as chair of a task force on improving public confidence in ID cards - the Public Private Forum on Identity Management. He recommended greater involvement by the banks and retailers in developing the scheme. Last year, he was again hired by the government to come up with ideas to kick start the stalled mortgage market. His report recommended giving a £100bn taxpayer guarantee to mortgage-backed securities, something that has yet to be adopted by the government.
Why are the Tories calling for an inquiry?
This row is a gift from above for the Conservatives, who have been sensitive to criticism of their own relationship with the City high-flyers who many blame for the financial crisis. It allows Tory leader David Cameron to pin the blame for the mess on Gordon Brown personally, questioning his judgement in using Sir James as an adviser.
What does HBOS say?
It refutes Paul Moore's allegations which it says have no substance or merit. Rather than being sacked, it says Mr Moore was made redundant as part of a restructuring process. It says the person employed to replace him had 20 years experience in banking and reported directly to the chief executive and the appointment was approved by the HBOS board.