Vince Cable and Michael Fallon were happy to snipe at the government and the Bank of England from the sidelines yesterday. It would be interesting to know what the Liberal Democrat Treasury spokesman and the Conservative vice-chairman of the Treasury Select Committee would have done had they been in Alistair Darling’s place on October 1 last year.

It was two days after Meltdown Monday, when UK bank stocks crashed through the floor and equity markets across the world fell sharply. By the following day, HBOS shares had lost 87% of their value in a year. On October 7, RBS shares fell 40% in a single trading session. There may not have been the queues of anxious depositors on the street that the Northern Rock collapse generated, but what amounts to the same thing was happening at RBS and HBOS as institutional shareholders rushed to offload their stock.

Yesterday, Bank of England governor Mervyn King admitted to MPs that secret loans totalling a staggering £61.6bn were made to the two banks to see them through this “dire emergency”. The loans, guaranteed by the Treasury, were “to prevent a loss of confidence spreading through the financial system as a whole”. Now repaid in full, they have only been made public now because RBS has signed up for the government’s Asset Protection Scheme and Lloyds Banking Group – which took over HBOS – has announced its rights issue.

Those Lloyds shareholders who were resisting that merger at the time are entitled to feel they were being misled. The government will use the greater good argument, and it is right. As the lender of last resort, the Bank of England has the power to act covertly. It was a temporary action to ensure continued funding and it was loaned on collateral of £100bn of high quality loans and mortgages so taxpayers were protected.

Yesterday’s news gives some perspective to attempts by some veteran Scottish bankers to save HBOS as an independent Scottish-based institution or even hive off the old Bank of Scotland as a separate entity. It is clear now that such a plan was pie in the sky in view of the bank’s desperately weakened state, weighed down by poor quality commercial property loans.

History is likely to judge that after a slow start in the financial meltdown, the British Government and the Bank of England took decisive action on a grand scale and staved off disaster. Now their challenge is to prevent such a crisis recurring. Banks are still too big to fail.