Britain’s Financial Services Authority (FSA) is set to face further attacks over its handling of the Northern Rock crisis tomorrow when it publishes an internal review into the affair.
The City's watchdog is expected to admit shortfalls in its supervision of the mortgage lender's board and call for up to 100 extra staff to help it monitor risks.
But reports suggest the FSA is unlikely to call for an inquiry into the conduct of the former directors of Northern Rock, which was at the centre of the UK's first bank run in more than 140 years last September.
The Newcastle-based group was nationalised in February, and currently owes around £25 billion sterling to the Bank of England after soaring borrowing costs forced it to seek emergency funding.
The FSA has already borne the brunt of criticism from MPs on the Treasury select committee, which accused the regulator in January of a "systematic failure of duty" by failing to spot the bank's "reckless" business plan.
Liberal Democrat spokesman Vince Cable described Northern Rock's former managers as a "bunch of cowboys" but criticised the FSA, which "did nothing to rein them in, or even appear to see there was a problem".
The FSA's own chief executive Hector Sants pledged to address the regulator's shortcomings following the crisis.
Last week saw the departure of Clive Briault, the managing director of the FSA's retail banking division and the man directly in charge of supervising Northern Rock at the time of its collapse.
Northern Rock fuelled its rapid growth by borrowing most of its cash for lending in wholesale money markets rather than relying on deposits, but the business model imploded when the credit crunch effectively cut off its funding supply last August.
Committee chairman John McFall said at the time of the report: "The FSA did not supervise Northern Rock properly. Its procedures were inadequate to supervise a bank whose business grew so rapidly."