Chancellor condemns bank chiefs

The Chancellor said some had wrongly given the impression that the problems afflicting Northern Rock were isolated and would not affect themselves.

He told the House of Lords Economic Affairs Committee there needed to be a complete change of culture in the boardroom of financial institutions in the future.

He also acknowledged there were "huge lessons" to be learned from the financial crisis in terms of the supervision and regulation of the banks.

Mr Darling told peers that financial institutions would have to stop offloading risk in the way they had and failing to ask enough questions about the liabilities they were taking on.

"That means, to my mind, the whole culture in boardrooms of financial institutions has to change," he said.

"Both executives and non-executives are not just there for the ride, to charge their fees, they are there to ask serious questions and to hold the executives to account.

"And indeed if some of these institutions had asked more questions about what was going on, perhaps we might not have got into this difficulty."

Challenged about the IMF's forecast that Britain was facing the deepest recession of any of the developed nations, Mr Darling made no attempt to repeat Gordon Brown's frequent assertion that Britain was better placed than other countries to weather the storm.

"Because we have such a large financial services sector and also because of the nature of our housing market, we were bound to be affected to a greater extent than some countries," he said.