Barry Tootell, the former chief executive of Co-op Bank, yesterday denied to MPs that Lloyds warned Co-op about its financial problems and insisted that regulators were consulted on a "very regular basis" about the deal.
Giving evidence to the Treasury committee, he said Co-op was derailed by a weaker than expected economy, fines for payment protection insurance mis-selling and increased capital demands from regulators.
But he said he could not recollect whether Co-op told Lloyds of its plans to boost its capital levels by selling off its life assurance and general insurance arms as it sought to snap up the 632-branch Verde portfolio.
Conservative MP Mark Garnier said: "There is an awful lot of corporate amnesia about this."
"I am worried this is catching among the board of Co-operative," he added.
Another Tory MP, David Ruffley, accused Mr Tootell, who left after Scot Euan Sutherland took over as chief executive of Co-operative Group in May, of "waffling", and "sliding away" from questions.
Mr Tootell came under sustained pressure to explain why the bank asserted it had a strong capital position at the end of 2012 shortly before suffering massive downgrades from ratings agencies and the unveiling of plans to fill a large capital hole.
He said that the Co-op had established that its capital position was becoming tighter in November 2012. But it intended to fill this by pursuing Project Pennine, a scheme to sell its two insurance businesses.
"There was a problem that we were addressing," he said.
Treasury committee chairman Andrew Tyrie said Co-op's capital position "was so tight that a puff of wind could have blown it over", before it was forced to pull out of a deal to buy Lloyds's Verde portfolio and announced a £1.5 billion capital raising scheme.
Mr Tootell insisted: "We didn't leap into action because Lloyds prodded us."
He said the proposed deal was not intended to bolster a fragile Co-op Bank. "A weak bank doesn't do a transaction like Lloyds to make itself strong,." he said. "A weak bank that is a bit stronger is still a weak bank."
Mr Tootell said that before the "now fateful" decision of Co-op to merge with Britannia building society in 2009, the bank had focused its scrutiny on Britannia's home loans and not Britannia's corporate lending book where large losses have emerged.
But he denied a claim by Tory MP Jesse Norman that Co-op made similar errors to Lloyds TSB, when it bought Halifax Bank of Scotland in 2008.
"Not enough due diligence was done on the HBOS assets," he said. "We had done substantial due diligence."
The Verde portfolio has been relaunched as TSB by Lloyds and will be floated on the stock market next year.
Co-op faces losing control of its bank as part of a deal to restructure the business and list it.