The decision to strip former Royal Bank of Scotland boss Fred Goodwin of his knighthood has been criticised by business and political figures.
Ex-Labour Chancellor Alistair Darling said the decision appeared to have been taken "on a whim", as Mr Goodwin was not the only banker to cause problems.
The Institute of Directors warned of creating "anti-business hysteria".
Mr Goodwin was RBS chief executive in 2008 when the bank's near-collapse prompted a £45bn taxpayer bailout.
The Queen cancelled and annulled the title on the advice of the forfeiture committee - whose members include top civil servants and the head Treasury lawyer - in a decision welcomed by party leaders.
It followed a clamour for Sir Fred to be stripped of the title, awarded for "services to banking" under the previous Labour government in 2004.
But Mr Darling, who as Labour chancellor led negotiations over the RBS bailout, said he was concerned about the "obscure" process used to annul the knighthood and said there should be a clear set of principles on which decisions are based.
He questioned the idea that the decision had been undertaken independently, telling the BBC: "Committees can see the way the wind is blowing. I think the minute he was referred, the outcome was inevitable.
"I'm not here to defend Sir Fred... I just think we're getting into awful trouble here if we go after people on a whim and we don't have a clear set of principles against which we can judge people, it's not right."
The Institute of Directors (IoD) warned of politicians creating "anti-business hysteria" over the matter. Its director-general Simon Walker told the BBC that removing a knighthood because "you don't approve of someone" without there being any criminal conduct "politicises the whole honours system".
In the past, only convicted criminals or people struck off professional bodies have had knighthoods taken away.
Former Confederation of British Industry chief Lord Digby Jones, a former trade minister under Labour, said there was "the faint whiff of the lynch mob on the village green" about the decision.
However, he added he did not disagree with the end result to strip the honour.
'Cabinet of millionaires'
Former Formula 1 motor racing world champion Sir Jackie Stewart - a friend of Mr Goodwin - said he thought the former bank boss had been made a scapegoat.
"No single person or even any single bank created the biggest financial recession in modern times," he said.
"To have this stripped I think is poor for the constitution and very dangerous for the future."
There were angry clashes in the Commons on Wednesday as Labour leader Ed Miliband pressed the prime minister to do more to make banks disclose how many employees were paid more than £1m.
David Cameron accused Labour of "hypocrisy" - saying the last Labour government had approved a bonus pool of £1.3bn at the Royal Bank of Scotland, and Mr Miliband was now in favour of action he had not taken in government. He had to withdraw the comment after the Speaker told him it was "not parliamentary".
But Mr Miliband accused the prime minister of giving "no leadership on top pay" - and said laws requiring banks to disclose high-paid employees was already on the statute book and could be implemented by ministers.
He added: "I think we have now heard it all. He says the class war against the bankers is going to be led by him and his cabinet of millionaires. I don't think it's going to wash."
Deputy Conservative deputy chairman Michael Fallon said it was wrong to suggest there had been political interference in the decision about Mr Goodwin.
He told BBC Radio 4's Today programme: "Ministers don't control the timings of the forfeiture committee, this is an entirely independent committee of civil servants."
He also rejected suggestions it had been "done on a whim" - saying it had been three-and-a-half years since the near-collapse of RBS and followed a detailed report by the FSA.
He suggested other bankers could yet face similar consequences but added: "This was the biggest bank, [Mr Goodwin] was the dominant player in it and I think the public rightly feel [he] got away scot-free at the time... We've had this persistent demand from the public as to why this man should be allowed to retain an honour he was given for services to banking."
Mr Goodwin oversaw the multi-billion-pound deal to buy Dutch rival ABN Amro at the height of the financial crisis in 2007, which led to RBS having to be bailed out to the tune of £45bn by taxpayers.
There had been a growing clamour for him to be stripped of his honour following thousands of job losses at RBS and in the banking industry, and the impact on the wider economy.
The BBC's business editor Robert Peston said Mr Goodwin was in a "class of his own" in terms of the risks that he took at RBS - reflected in the size of the bailout required to rescue the company.
In 2009, Mr Goodwin, who received an annual pension of £650,000 - later reduced to £342,500 - after leaving the bank, told a committee of MPs he "could not be more sorry" for what had happened.