The plight of Northern Rock remains a huge embarrassment for both the UK’s policymakers and its financial sector. The authorities confronted a bank run, only to end up guaranteeing the bank’s deposits and funding at least £20bn ($40.9bn) of its liabilities, so far. Many believe government subsidy will be needed if another institution is to be cajoled into taking Northern Rock over. Yet, it still has positive value in the stock market. That is indeed remarkable. So who is to blame for the debacle and what lessons should the UK learn?

Let us call a spade a spade. The blame for the vulnerability of Northern Rock lies with its management, which did not seek to insure their institution against disruption to its funding. The fact that it is the only significant UK bank whose financing imploded during the crisis demonstrates that its problems were specific and home-grown, not generic and so the fault of others.

How far are the authorities also to blame? Most critics believe the regulator, the Financial Services Authority, shoulders a good part of it. This is understandable, given the scale of the debacle. Yet what is not clear, at least to me, is what it should have done. Should it have compelled the bank to insure itself against the risk of a disruption to its liquidity? How far do we want regulators to micro-manage institutions, anyway? Would it not be better to let mismanaged institutions go under, while protecting small depositors effectively? Answer: yes, it would.

The remainder of this column can be read here. Debate from our guest economists appears below.