In his new book explaining the financial crisis, Beyond the Crash, the former prime minister writes that as chancellor of the exchequer he was not told about the extent of the reckless lending.
Brown says RBS grew from a sound bank into a reckless speculator, while Sir Fred Goodwin, former chief executive of RBS, “always had a complaint about something the government had failed to do for him”.
Brown says: “People will rightly ask why we did not know earlier of the fundamental weakness of Royal Bank of Scotland. The simple answer is: we were misled.”
Last week the Financial Services Authority cleared RBS of any wrongdoing after the bank required a government bailout to save it from collapse in 2008.
He also claims that if bankers bonuses had been 10% less every year between 2000 and 2007 then they would have had the capital to withstand the crisis.
He says: “The reason bankers’ pay is absolutely crucial to the wider story is because there is a very particular relationship between actions taken by one person and consequences suffered by everyone. Excesses in remuneration are not cost-free.
“We can now detail in the most precise terms the cost of excessive remuneration at the expense of adequate capitalisation. We now know that, if British bankers had paid themselves 10% less per year between 2000 and 2007, they would have had more capital, some £50bn more, to help them to withstand the crisis.
“The extent of the under capitalisation of our banks was £50bn, and was exactly the sum put up by the taxpayers for the emergency stabilisation of our banking system.”