James Moore: A megabank can still hit the rocks and it will be far from orderly if it happens

Outlook: The trouble with Lehman was it was too big to fail, with tendrils that spread so much poison

It is worth remembering that what nearly tipped the world into a financial nuclear winter as the crisis reached its height was the fall of Lehman Brothers and the decision by the US government to allow it to happen. In the days that followed politicians and regulators rapidly came to the conclusion that they could not allow a repeat, hence the bailouts of Royal Bank of Scotland and Lloyds Banking Group (following the latter's ill-fated decision to rescue HBOS) in the UK and a large number of their peers around the world.

Yesterday's package of reforms announced by George Osborne, accepting most of the Independent Commission on Banking's recommendations (with a big sop to HSBC, see right), will likely produce safer banks, at least in terms of the amount of capital they hold and therefore their resilience in the face of future crises (hello eurozone).

They will also cost the industry up to £8bn, more than the Commission's forecast even with the HSBC concessions, but the economy only £1bn (less than the ICB's estimate).

In other words Mr Osborne wanted to sound tough on the banks but not on the economy. And his officials cooked up some figures to allow him to do that.

He didn't really need to produce other figures to justify the need for action, the ones showing that the UK banking industry's collective balance sheet accounts for 500 per cent of GDP compared with 300 for Germany and France and 100 for the US.

The strength of this industry is not a potential weakness to the economy, as he suggested. It is an actual weakness, as the events of the past four years have proved.

But back to the lesson of Lehman, which yesterday's reform package, still at the consultative stage remember, doesn't really address.

The trouble with Lehman was that it was too big to fail. It was so systemically important, with tendrils that touched so many other institutions and spread so much poison that another such event simply could not be allowed.

Vince Cable, the Business Secretary, was busily huffing and puffing over the weekend in his role as Cabinet dissident in chief, talking loudly about breaking up the banks again.

Yesterday's announcement, however, will do no such thing. Yes, retail banking and banking for small and medium-sized enterprises will be "ring-fenced" from the casino.

But even then smaller "non-systemically" significant banks could receive exemptions. Northern Rock was a smaller bank considered to be not systemically significant, remember.

And the fact remains that if, say, one of the big banks hits a double zero on the roulette wheel, all that extra capital might still not be enough.

The failure of a megabank is still what gives regulators nightmares. Because allowing it to happen is all but unthinkable.

British banks are safer now than they were. But it is still very hard to see how one of the big four could realistically be allowed to fail "in an orderly manner" as Mr Osborne claims they will now be able to do.

Bank failures, as history proves, are usually anything but orderly and, deep down, Mr Osborne knows that.

So does Sir Mervyn King at the Bank of England. If the former isn't losing any sleep over it, the latter surely is.

Ungrateful HSBC should not be allowed to scarper

There was a famous speech in which a certain John F Kennedy urged Americans to ask not what their country could do for them but instead to ask what they could do for their country. Britain's banking industry has turned this on its head and none more so than HSBC.

It might not have taken a penny in direct state aid, as HSBC executives are terribly fond of reminding anyone who cares to listen.

But it is sophistry for them to try to suggest that their bank didn't derive enormous benefit from the indirect aid that has been lavished on their industry to keep it from falling on its face. That has done nothing to stop HSBC from attempting to hold a gun to the head of the Government. Its message: if we don't like your reforms, we'll be off.

The 75-page consultation document on how the Independent Commission on Banking's proposed reforms will be implemented by Parliament could bring matters to a head, at least when the experts have worked their way through pages and pages of technical verbiage.

Then it will be decision time.

It looks like HSBC has won some concessions that take note of the fact that its subsidiaries appear at least to have some ring-fencing in place. HSBC might not have to raise quite as much capital as had been thought if it can prove its overseas operations don't pose any risk to the UK taxpayer (bet on this happening). Who knows, the World's Local Bank might even have achieved this without its gunboat approach to lobbying.

But the bigger issue is whether it should be allowed to indulge in the regulatory arbitrage on a grand scale that it has been threatening. What would the consequences be if it were permitted to up sticks because of its venal executives deciding their home no longer suits? What is there to stop other banks from doing the same?

It is true that plenty of other businesses have taken this step. Just look at the number of "UK" companies headquartered across the Irish sea.

The trouble is banks are not like other businesses. And it remains to be seen whether a global economy already beset with grave challenges, can really cope with footloose and fancy-free megabanks waltzing around the world in a race to the regulatory bottom.