The outgoing Bank of England governor has called on the British people not to "demonise" bankers, prompting debate on how much responsibility he should take for the financial crisis.
Mervyn King said on Sunday that the failings of the financial and regulatory system were the root cause of the turmoil, which struck the world economy almost six years ago.
King, who leaves the bank this summer, told Sky News' Murnaghan programme that there was widespread risk-taking in the run-up to the credit crunch, and it had been a mistake to give the banking sector such a lofty status in the good times.
"Where the banks contributed to the problem was that they themselves had taken too many risks on their balance sheet and they simply didn't have enough capital to absorb the losses that were likely to come along, and people took fright, they lost confidence in the banks, they didn't provide money to the banks, so the banks couldn't lend to businesses or households," King said.
"I would say to people though, don't demonise individuals here. This wasn't a problem of individuals, this was a problem of failure of a system.
"We collectively allowed the banking system to become too big, we gave them far too much status and standing in society, and we didn't regulate it adequately by ensuring it had enough capital."
Asked if he regretted not doing more to prevent the crisis, King said he and the Bank had issued numerous warnings.
Conservative MP Brooks Newmark said King could not escape some responsibility for the errors that helped to cause the biggest financial crisis in generations.
"He is the governor of the Bank of England. It says on the tin what he is responsible for," Newmark told Murnaghan.
Paul Myners, the former City minister, agreed that King had failed to see the problems building up in the run-up to 2007, and had become "hung up on moral hazard" once the banking sector was being bailed out.
"The judgment of history, which with governors is written about 100 years later, will say that he failed in [those] two very major respects and also a third one, that he failed to modernise the Bank [of England]," Myners said.
King also expressed concern over the government's home-ownership programme, the Help to Buy scheme, which involves the administration guaranteeing up to 15 per cent of a mortgage on properties worth up to £600,000 (HK$7 million).
The scheme, which begins in January next year, is due to run for three years. King said there was "no place" for a permanent scheme of this kind.
"We do not want what the United States have, which is a government-guaranteed mortgage market, and they are desperately trying to find a way out of that position," he said.
King also warned that the struggling euro-zone economy remained the largest threat to the UK's recovery.
"It is very difficult to see that they [the euro zone] will be growing quickly for a long while, and that downward drag on exports from the UK to Europe and the fact that our banks still have some exposure to the euro here is undoubtedly the single biggest factor dragging our economy."
The euro-zone economy has been shrinking for the past 18 months with sharp recessions in countries such as Spain and Italy.