Let me list 5 things off the top of my head more important than Sir Fred losing his knighthood.

1. RBS is missing its targets to lend to small business, and Project Merlin, in general, has not worked in supplying more credit

2. Why has there been no independent report into the failures at HBoS? We might as a nation, in splenetic rage at essentially the failure of the Scottish banks, be learning entirely the wrong lessons about the future of this controversial but undoubtedly lucrative industry.

3. The combination of bonus tax, levy, gold-plated capital and liquidity regulations, bonus witchhunts makes our banks more sensitive to their shareholders urging a move.

4. The UK bank reforms are being seen as a poster child for “deglobalisation” of finance, or a desperate attempt from countries around the world to repatriate capital.

5. Stephen Hester’s strategy of trying to trade RBS out of its troubles using huge investment bank profits, which worked, briefly, is not working any more.

I have two sources for my cynicism. Why now? Amazing that it pops up during bonus season. First bankers lose their bonuses, then their knighthoods, perhaps tomorrow one of their limbs. And then the use of the word “symbolise” by the Chancellor and the likes of Lord Oakeshott. It’s all too suggestive of an attempt to communicate having done something about a problem without a root and branch look at the causes of the problem. It is narrative-based politics, but actually without a great deal of substance. It’s an easy hit. A ritual sacrifice to appease public sentiment, and possibly distract away from the contracting economy.

The bigger picture here is that the entire political class is struggling right now with the border between the state and the British banking system. Far more important than de-honouring, is de-leveraging. Project Merlin has come to an end, I am told by senior bankers, and some banks have smashed their targets, and others have missed them. All will be revealed in the upcoming bank results season.

The Treasury has promised us Credit Easing, government guarantees of small business lending, but the mood music from UK banks in Davos is that they are not yet convinced it can work. The lack of credit, confidence, and investment is the prime cause of the jobs crisis emerging in Britain, and of course the fact that the economy is shrinking and possibly in recession.

So the really tough question here is whether, as suggested by the Bank of England’s Adam Posen, RBS is fated to become a vehicle for state-directed lending. When Adam Posen is ridiculed, there’s normally a time lag of about a year before his Japan crisis-influenced ideas become official government policy. Frankly, the knighthood, and the Hester bonus are third and fourth order. It is a radical idea. Politicians are scared, mainly, I would say, because they are terrified of getting blamed. Yet they have started to interfere on bonuses. They have taken a couple of steps down a rather slippery slope.

We are always told that getting back the £45 billion taxpayer investment in RBS is all that matters. That incentive is hard-wired into UK Financial Investments ownership strategy. Perhaps it would make more sense for us to risk losing some of that 1-2 per cent of GDP, say, with an entirely different strategy to boost, say SMEs.

The real lesson of this bank bonus season may well be that with its state-owned banks, for the economy’s sake, the government needs to be far less arms-length, and far more strong-arm.