James Moore: A quick fix would not have prevented this crisis

The contrast with Barclays and HSBC could barely be more stark
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Gary Hoffman was once the boss of Barclaycard and was even mentioned in some places as a contender for the top job at Barclays Bank. That was never really terribly likely, given he was up against the likes of Bob Diamond and John Varley. He subsequently found himself sidelined, heading up corporate and social responsibility. Now he's the boss of a Rock in a very hard place.

There is no question about it, whatever gloss he was attempting to put on it, the numbers that put out by the State-owned bank were horrible. They are likely to be followed by yet more dispiriting reading from Lloyds TSB today and Royal Bank of Scotland on Friday.

The contrast with Barclays and HSBC, which together reported nearly £6bn in profits on Monday, could not be more stark. The former, of course, made its money from investment banking, which means fat cats and fat bonuses. And yet it is in (relatively) rude good health.

One of the consequences of the banking crisis has been the growing call for a return of something like America's Glass-Steagall Act that once enforced a strict separation of investment banking from deposit taking. The idea is that youthful traders high on fat bonuses and adrenaline-fuelled risk-taking should not be allowed to bring down banks while putting deposit takers' money at risk. The Chancellor, Alistair Darling, has so far resisted this and on this point, if not on much else, he might be right.

Northern Rock never engaged in such trading. And nor did its even uglier sister Bradford & Bingley, whose toxic-loan book is also propped up by the taxpayer. They both appeared to be rather boring banks that took savers' money and lent it out. The problem is that they both expanded too far and too fast, relying on short-term funding from the international money markets to finance long-term loans. They were allowed to do this by regulators who, if they did see anything to worry about, looked the other way. Trading had nothing to do with it.

There is no doubt that regulation should be tougher in future. Banks quite clearly need to hold more capital, not only against risky trading, but also to cover themselves against the simpler business of loans going wrong.

It also should not be forgotten that Barclays nearly could have become a victim of the credit crisis itself had it succeeded in its attempt to buy ABN Amro, being saved only by Sir Fred Goodwin's incredible hubris at Royal Bank of Scotland when he trumped the Barclays bid.

But it has become fashionable to bash Barclays at a time when its investment bank promises to pour considerable sums into the Exchequer that will be needed to prop up its rivals. It has even been suggested that it should face a punitive regulatory tax, that could yet force it to spin off Barclays Capital, throwing the baby out with the bathwater. There is something not quite right about that and there is something not quite right about suggesting that a quick fix like Glass-Steagall could save us from a second dose of financial flu.