Former Royal Bank of Scotland Group CEO Fred Goodwin is now also a former knight of the realm. Goodwin, on the advice of the Honors Forfeiture Committee in Britain, was stripped of his knighthood, conferred for services to banking, in the wake of the biggest bank bailout in the world. The news came less than 48 hours after the current CEO of RBS, Stephen Hester, said he would waive his own bonus in a storm of political and public criticism.

Bloomberg reported Tuesday that the announcement of the decision was made by the Cabinet Office in London. Goodwin, knighted in 2004 in the name of Queen Elizabeth II, had been entitled to call himself Sir Fred, but after presiding over the bailout of the 285-year-old bank by the British government, the Honors Forfeiture Committee advised that the honor should be revoked.

The Cabinet Office issued a statement that said in part, “This decision, not normally publicized in advance, was taken on the advice of the Forfeiture Committee, which advised that Fred Goodwin had brought the honors system into disrepute. The scale and severity of the impact of his actions as CEO of RBS made this an exceptional case.”

The office further said that Goodwin was the “dominant decision maker” at the time of RBS’ collapse, and that the committee had used reports published by the House of Commons Treasury Select Committee and the Financial Services Authority last month as it reached its decision. RBS was injected with 45.5 billion pounds ($71.7 billion) and posted the largest loss in British history.

The FSA report on the bank’s collapse, which was published Dec. 12, said that its supervision team had concerns about potential risk from Goodwin’s assertive and robust style as early as 2003. It also said there was “an important question” about his judgment in choosing the individuals he did to run RBS’ investment banking division.

Prime Minister David Cameron issued a statement that said, “I welcome the Forfeiture Committee’s decision. The FSA report into what went wrong at RBS made clear where the failures lay and who was responsible. The proper process has been followed and I think we’ve ended up with the right decision.”

Not everyone is content with the action, however, feeling that it does not go far enough. Mark Field, the lawmaker from Cameron’s Conservative Party who represents London’s financial district, was quoted saying, “All this song and dance about the knighthood is a sideshow. I’m much more concerned that he’s collecting 370,000 ($586,000) pounds a year in pension. The real issue is rewards for failure.”

David Fleming, spokesman for the Unite union, which represents bank workers, was also critical in a statement, saying, “It is a token gesture to strip Fred Goodwin of his knighthood, but one which will be well received by the thousands of workers who lost their jobs during his rule. Nonetheless, this will do nothing to bring job security to the staff across the banking sector who continue to work under a culture of excess and greed at the top. Action from the government is needed in banking reform, not simply empty rhetoric on knighthoods or shareholder activism.”

Perhaps such criticism is only the beginning. Will Hutton, a former director of the Work Foundation research group and author of “The State We’re In,” a 1995 book that advocated less reliance on finance, was quoted saying, “This is a watershed 48 hours which dramatizes the urgent need for financial services to re-earn legitimacy with the rest of civil society. For three years, bankers have lived in a parallel universe.”

Political criticism is piling on. The report quoted Andy Love, a Labour member of the House of Commons Treasury Committee, saying, “The debate over the last few days has shown how unhappy the public are, given the sacrifices they are having to make because of the austerity program that was mostly the result of what happened in financial services, particularly when senior officials are paying themselves huge bonuses. I hope both RBS and others respond to that mood.”

And another Treasury Committee member, Michael Fallon, deputy chairman of Cameron’s Conservative Party, said in the report that officials in the Lloyds Banking Group takeover of HBOS, another bailed-out transaction, could be next: “There’s going to be a report from the Financial Services Authority into the HBOS-Lloyds disintegration, and who knows what will follow from that. If you hand somebody a knighthood for services to banking, then you’ve got to make sure he continues to be a worthy recipient of that honor.”

Some officials, and newspapers as well, were critical of the decision to strip Goodwin of the honor. Former Labour Chancellor of the Exchequer Alistair Darling said in the report, “The government appears to be going after individuals without establishing the principles on which people are going to be judged. We’re getting into awful trouble here if we go after people on a whim and we don’t have clear set of principles against which we can judge people.”

And the Daily Telegraph said the action “sets a new benchmark, whereby anyone identified as a convenient scapegoat for the country’s woes can be similarly disparaged.”