1 of 3
FILE - April 25 2007 file photo of former Royal Bank of Scotland chief executive Sir Fred Goodwin who led the bank into near collapse. Goodwin has had his knighthood canceled and annulled, the British Cabinet Office said Tuesday Jan. 31, 2012. because he had brought the honors system into disrepute. Revoking knighthoods is rare but the government says "the scale and severity of the impact of his actions as CEO of RBS made this an exceptional case.

LONDON — The man who led the British government's bailout of Royal Bank of Scotland said Wednesday the decision to strip the bank's former chief executive of his knighthood was distasteful.

The government's Honors Forfeiture Committee decided to annul the title awarded to Fred Goodwin, who pursued the takeover of Dutch bank ABN Amro that led RBS to the brink of collapse in 2008.

Many politicians cheered this public humiliation, but some former ministers and business leaders were uneasy.

"There is something tawdry about the government directing its fire at Fred Goodwin alone," Alistair Darling, who was Treasury chief at the time of the bailout, wrote in Wednesday's editions of The Times.

"If it's right to annul his knighthood what about the honors of others who were involved in RBS and HBOS (Halifax Bank of Scotland)?"

The government invested 45 billion pounds ($71 billion) in rescuing RBS, and now holds an 82 percent stake in its shares. HBOS was sold to Lloyds in 2009 to save it from collapse.

Knighthoods are rarely taken away; Goodwin is now in the company of Zimbabwe's President Robert Mugabe and former Romanian leader Nicolae Ceaucescu, who both had honorary titles.

Digby Jones, a businessman and former government minister, said Goodwin "deserves what's come to him" but nonetheless had some reservations.

"There is the faint whiff of the lynch mob on the village green about this, but isn't to say that the end result isn't what is right," Jones, a former leader of the Confederation of British Industry, told Sky News.

Both ABN Amro and RBS were bailed out by taxpayers but Goodwin, who walked away from the RBS disaster with a hefty pension, has been a particular target of public ire.

"There is a sense that this guy had got away scot-free and the only thing left really to show the public public opprobrium was for the knighthood to be stripped," said legislator David Ruffley.

Prime Minister David Cameron, Treasury chief George Osborne, Deputy Prime Minister Nick Clegg and opposition Labour Party leader Ed Miliband all said the decision was right.

Famed racing driver Sir Jackie Stewart, a friend of Goodwin, said others shared responsibility for RBS' plight.

"The then-Prime Minister Gordon Brown supported the deal, the chairman of the board of RBS and its entire board approved the deal and the Bank of England did not object to the AMRO deal going through and the Treasury did not object to the deal going through," said Stewart.

Simon Walker, director general of the Institute of Directors, said Goodwin was the victim of "antibusiness hysteria."

"To do it because you don't like someone, you don't approve of someone, you think they've done things that are wrong, but actually there's no criminality, alleged or charged, I think is inappropriate and politicizes the honors system."

Demands for action against Goodwin grew at the same time as government officials were pressing RBS' current chief, Stephen Hester, to turn down an annual bonus of shares currently worth nearly a million pounds ($1.6 million).

Hester did so over the weekend, and RBS Chairman Philip Hampton also refused a bonus.

Antonio Horta-Osorio, chief executive Lloyds Banking Group, the other bailed-out bank, previously said he would not be taking his bonus for last year.