The New Economics Foundation says Britain faces further economic chaos as banks come to terms with a £25 billion funding gap in 2011.
The NEF says that the cost of propping up the banking sector is £1.2 trillion and that the UK's banks could well seek more money from the state and the taxpayer as a result of their failings.
In a new report, 'Where did our money go?', the think-tank says there has been a shocking lack of information on how our money has been used and a need for a radically different economic approach.
In 2008, the government issued the biggest single public bail-out in history to rescue major retail banks in the middle of a credit crisis.
The New Economics Foundation report asks where the money went, who has benefited from it, and what was asked of the banks in return.
It says new lending to households and firms has stagnated and that interest rates for these borrowers is higher than it was before the crisis began - or was noticed.
The NEF calls for urgent reform of the banking sector. It warns that the results of current inquiries such as the Independent Commission on Banking (ICB), which began its work on 1 October 2010, and will take a year to report, have come far too late.
Tony Greenham, head of the finance and business programme at the NEF, said today: "The public have already paid for the failure of the banks twice, first by bailing them out and then by suffering a programme of drastic cuts to public services to appease the financial markets."
The NEF argues for splitting retail operations from more risky investment banking and breaking up "too-big-to-fail" institutions.
In considering the fall-out from the financial crisis, 'Where did our money go?' questions whether the coalition government's cuts agenda is right and what its consequences will be.
It examines both immediate alternatives, what should be done to prevent future crises, and how banking should change to be useful to the wider productive economy and society.
The report concludes that considering the massive impact of the failure of the banks, action to address systemic problems has been woefully inadequate, and that the current banking system is not yet fit for purpose.
The report aims to re-focus the finance debate towards the major economic, social and environmental challenges that we currently face, rather than short-termism.
The New Economics Foundation is holding a series of events and debates on 'surviving the Great Transition', including one today at the Conservative Party conference in Birmingham (http://www.neweconomics.org/events).
The full report can be downloaded or purchased as a print edition here: http://www.neweconomics.org/publications/where-did-our-money-go
More on NEF: http://www.neweconomics.org/