The sudden resignation of Sir James Crosby as deputy chairman of the Financial Services Authority may be an unusually swift example of accountability. But more importantly, it shows how the FSA and its counterparts in other countries face an apparently insoluble Catch 22.

The departure of Crosby, the former chief executive of the now quasi-nationalised bank HBOS, came after allegations that he was personally involved in the sacking of a risk manager at the bank who warned in 2004 that HBOS was running into trouble. In a gracious statement, Crosby said that while he denied the allegations - which had been fully investigated by the FSA and KPMG in 2005 - he was stepping down in the best interest of the FSA.