For the first time since the financial crisis broke, the tentacles of accountability have reached up to wrap themselves around Gordon Brown's ankles. In a general sense, of course, he has been responsible for the management of the British economy for the past 12 years. He took credit for the boom and was foolish enough to appear to promise that there would be no bust. Last week, however, came the evidence of Mr Brown's direct culpability for the credit bubble that has now popped. Paul Moore, a former risk manager at HBOS, warned in 2004 that the bank's business model was unsafe. His warning was investigated by KPMG, the accountancy firm, and was dismissed – as was Mr Moore. By contrast, James Crosby, chief executive of HBOS, was knighted.
In a sullen two and a half hours of stonewalling in front of MPs on Thursday, the Prime Minister said he knew nothing of Mr Moore's concerns at the time. In fairness, it is impossible for ministers to act on every warning that comes their way. But even if the KPMG report were accepted as a clean bill of financial health, Mr Brown should have wanted the Financial Services Authority (FSA), the City regulator that he set up, to have been as robust as possible in asking awkward questions. Instead, Mr Brown appointed Sir James Crosby as deputy chairman of the FSA in November 2007, two months after Northern Rock hit the buffers. By then, the HBOS business model was being more widely questioned. As Mr Moore tells Margareta Pagano, our business editor, today: "You would want to ask more, wouldn't you?"
It is all a question of what bankers and corporate lawyers call due diligence. Mr Brown did not carry it out on Sir James's appointment; and he did not ensure that the FSA carried it out on the bankers staking increasingly large bets on the continuing expansion of credit. Nor was it carried out by Lloyds when it took over HBOS four months ago, a shotgun marriage for which Mr Brown was keen to take the credit when it seemed like decisive action. Now that it has all gone horribly wrong – HBOS's toxic debts came close to sinking Lloyds, a previously sound bank, last week – the Prime Minister suggests that it was nothing to do with him.
It should be no surprise, therefore, that our ComRes poll carried out last week finds that Labour's support has dropped almost as fast as the Lloyds share price. As John Rentoul writes today, the turning point was President Barack Obama's announcement of a salary cap for banks dependent on the US taxpayer. That exposed Mr Brown as hopelessly uncritical of the system of excessive rewards in the banks that had helped to bias them in favour of excessive risk.
The Prime Minister cuts a tragic figure, in the proper meaning of the word. He was a good Chancellor in many ways, in particular in making the Bank of England independent. But at the same time he set up a system of City regulation that was deeply flawed. In order to detoxify Labour's reputation for economic incompetence he entered into a Mutual Admiration Deal with bankers that turned out to mean Mutually Assured Destruction when things went wrong.
By the time he became Prime Minister, he never stood a chance. Again, he did some of the right things as the credit crunch hit, but was too respectful of the bankers. Thus the general public do not feel that he is on their side, and nor do the bankers feel under pressure to change their assumptions.
The renaissance of Mr Brown that began in the autumn has proved to be short-lived. The Independent on Sunday accepts, however, that he is likely to remain at his post until the election. It may be unfashionable to say so, but it is right that he should. For all his mistakes, there is no one else in the Cabinet who is obviously more capable of taking the decisions about how best to manage the downturn and the beginnings of recovery.
And, as our poll confirms, there is no confidence that the Conservatives would have handled the crisis any better, or that they have any better policies for getting the country out of it. There is a kind of justice in the Liberal Democrats' gain from this plague of doubt on both your houses. Vince Cable, the Lib Dem Treasury spokesman, has been perhaps the most impressive front-rank politician as the crisis has unfolded.
Meanwhile, Mr Brown is like a toxic bank: he needs to assume the burden of blame for the policy errors, so that other political actors can develop new ideas untainted by the past. His long-term reputation may have to suffer so that, for the sake of democratic accountability, the buck stops and is seen to stop with him.