Sir John Vickers' Independent Commission on Banking (ICB) will today be accused of "a dangerous dereliction of duty" by one of the Bank of England Governor's favourite economists.
Sir Mervyn King urged MPs to visit Boston University's professor of economics, Larry Kotlikoff, if they were in the US, in testimony to the Treasury Select Committee last year.
In a report to be published today by Civitas, the think-tank, Mr Kotlikoff shows how uncompromising his views on Britain's stumbling efforts to reform banking have become.
In it, he concludes: "A banking system that was terribly risky will, on balance, end up riskier; a regulatory system that was dysfunctional will now have many more things to get wrong; and a population that was praying for a sure economic future will be left on its knees."
Mr Kotlikoff's warning comes amid increasing pressure on Barclays directors to re-examine the case for hiving off its investment bank in the wake of the Libor interest rate scandal.
With the resignations of Bob Diamond, chief executive, chairman Marcus Agius and Jerry del Missier, chief operating officer, some institutional investors believe it is time to re-examine the bank's structure.
Deputy chairman Sir Mike Rake is conducting a root-and-branch review of the business. They believe this should look at the case for a split.
"Now is a very sensible time to pause, draw breath, assess what's happened and look again at this question of a ring fence or separation," said Lord Hollick, a member of the House of Lords Economic Affairs Committee.
But Mr Kotlikoff's report The Economic Consequences of the Vickers Commission says the so-called ring-fenced "good banking" could make the situation worse because "good" financial assets can rapidly go bad: "One glance at the current eurozone crisis shows the folly of the commission's way. Good/safe, AAA-rated assets, like Italian government bonds, can suddenly turn bad/risky."
"In this case, the commission's ring-fenced banks would fail if gilt prices dropped by only 4 per cent," the report warned.
Larry Kotlikoff wants bank deposits matched pound for pound and placed in cash mutual funds which cannot borrow, rather than allowing banks to invest them in risky activities.