The most notorious were those offered by the now nationalised Northern Rock bank.
The BBC's Gary O'Donoghue says Mr Ruddock is chief executive of a hedge-fund which effectively gambled on the decline of the value of Northern Rock bank.
When the Northern Rock bank went bust that year it became obvious that this limit was not high enough to reassure savers, who were then staging a crippling run on the bank.
Perhaps more importantly, borrowing that much on wholesale markets is neither a stable or prudent way to fund any bank - as the UK taxpayers found out to their cost when Northern Rock, Royal Bank of Scotland and HBOS all went to the brink of collapse after their access to wholesale funds dried up in 2007-8.
At the very instant that Northern Rock and Royal Bank of Scotland both collapsed and needed to be rescued, they looked the picture of health on the Basel measures.
Mr Brown also suggested that state-owned bank Northern Rock may be changing its approach towards repossessions - in October it emerged the bank was repossessing 50% more properties than the industry average.
That was the case with Northern Rock, a British bank that grew explosively before failing in 2007.
Lawyers working for the British bank Northern Rock threatened court action after the site published an embarrassing memo, but they were practically reduced to begging.
Mr Peston was hardly shouting from the rooftops before Northern Rock, a British bank, went bust in 2007, a scoop that won him a journalistic award.
The British banking industry has been among the worst hit by the crisis with the government stepping in to rescue several major banks, including Northern Rock and the Royal Bank of Scotland, from collapse.
But rather like Northern Rock, the British bank that became too dependent on the wholesale markets for funding and collapsed in 2007, countries such as Greece and Italy have discovered that investors can suddenly withdraw their favours.
The drying up of liquidity has bought down firms such as Bear Stearns, an American investment bank, and Northern Rock, a British mortgage lender, with devastating speed in the past year.
But the news, far from reassuring anyone, sparked a run on Northern Rock, Britain's first bank run since the 1860s, and caused all manner of wild worries about the whole British banking system.
"The simple fact is that the chancellor has made it clear that all existing deposits in Northern Rock are fully backed by the Bank of England and are totally secure during the current instability in the financial markets, " he said.
As the mortgage crisis unfolded late in the summer of 2007, Northern Rock was forced to turn to the Bank of England for liquidity support to meet short term debt obligations, unable to secure adequate funding through private channels.
FORBES: Billionaire Richard Branson's Virgin Money Acquires Northern Rock For $1.2 Billion
But remember the state still owns tens of billion of pounds of old Northern Rock mortgages, the so-called bad bank.
But in England, the first bank to fall over was Northern Rock, brought low firstly, by offering mortgages on too generous terms (125% of valuation and so on) and by their funding model.
The communication difficulties between the UK Treasury, the FSA and the Bank of England during the Northern Rock crisis in 2007 illustrated some of the problems that can occur when there is incomplete co-ordination between the lender of last resort and the bank supervisor.
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The former chairman of Northern Rock, who resigned over his role in the bank's near collapse, has won a seat in the House of Lords.
In 2008, some of the world's banks - which had invested in risky financial products - collapsed, including Royal Bank of Scotland, HBOS and Northern Rock in the UK. All were bailed out by the taxpayer at some point.
Northern Rock was forced to seek an emergency loan from the Bank of England on 13 September last year.
We should perhaps also remember, the toughest ring fence in the world would not have prevented the failure of Northern Rock - which did not have any "risky investment bank activities" to speak of.
Northern Rock's customers rushed to withdraw their savings after the Bank of England offered the mortgage lender emergency funding.
It also emerged that Sir John Gieve, the deputy governor in charge of financial stability, who came in for criticism for the central bank's poor response to the crisis at Northern Rock, will leave his job early, in 2009.
The European Union recently approved plans for Northern Rock to be split into a "good" and "bad" bank - paving the way for a partial sale.
The formal 100% government guarantee for the Northern Rock's savers was brought to an end in May 2010 after the bank had been nationalised and then split in two.
Well three and a half years after Sir Richard Branson's Virgin Money first tried and failed to buy Northern Rock, there is a reasonable chance that it will end up buying the bank this time.
BBC: No chance of Northern Rock becoming building society again
That shortage of cash played a role in taking Northern Rock to the brink of collapse, made it impossible for HBOS and Royal Bank of Scotland to survive without emergency loans from the Bank of England, and was an important factor in the collapse of Lehman Bros.
He took the job as head of the FSA two months before the collapse of Northern Rock in 2007, which was followed by huge government bailouts for two leading banks, Royal Bank of Scotland and Lloyds TSB.
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Second the credit crunch had started to hit home and for the first time in more than a hundred years, there had been a run on a British bank with the extraordinary sight of queues of savers lining up outside branches of Northern Rock to extract their cash.
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