For someone accused of being too academic, it was a decisive act and the culmination of five years of animus.
But from the moment the credit crunch began to wreck Northern Rock's finances in the summer of 2007, the grammar-school boy from Wolverhampton, whose father was a railway worker and then a geography teacher, was ready with his analysis. King said most of the huge debts accumulated by banks could be tied to the huge bonuses executives received as reward for their lending.
In meetings with regulators and then chancellor Alistair Darling, Diamond, then head of Barclays Capital, and his investment banking peers were seen as a bunch of amoral, greedy traders. Darling relates in his diaries how King would counsel against providing rescue funds that perpetuated a risk-taking culture.
But it was Diamond, one of nine children and also the son of a teacher, who made it public and personal. At a time when most bankers were busy trying to prevent their institutions going bust, he broke cover to give an interview in a Sunday newspaper. In an analysis of central banks' actions in combating the credit squeeze, Diamond notably excluded the Bank of England from praise.
He said providing short-term cash was the job of a central bank. "For the recovery to continue we need to find more ways to get liquidity into the short end of the curve," he said. "That's down to confidence, and that's down to the central banks. We've seen thoughtful moves by the [US Federal Reserve] and the [European Central Bank]."
The Bank of England saw the interview as a direct attack on its handling of the crisis. King's response was to embark on a series of speeches and interviews in which he openly decried the emergence of a "small elite" that agreed to pay itself bonuses in good times and bad. Typical was one in 2009 in which he said: "To paraphrase a great wartime leader, never in the field of financial endeavour has so much money been owed by so few to so many. And, one might add, so far with little real reform."
The general election of 2010 provided an opportunity for King to rein in the bankers. The coalition backed plans to strip the Financial Services Authority of its watchdog powers and hand them to the Bank of England. The chancellor, George Osborne, also supported proposals to ringfence casino-style investment banking from the day-to-day retail banking business.
King wanted banks to be split, not ring-fenced with complex rules, but lobbying from Diamond and the rest of the industry stymied his plans.
Still, King could look forward to the day when his successor was able to boss around the likes of Diamond as chief regulator.
In 2011, Diamond grabbed the first Today programme lecture to argue that banks had changed. No longer were they susceptible to reckless behaviour. He said Barclays would be "a good citizen".
Diamond said: "I understand why many people wonder if anything has really changed. But the reality is, much has changed."
Seven months later, in May, King was given the chance to deliver the second lecture.
The morning after, he was interviewed by presenter Evan Davis, who said many experts accused him of being too academic and keener to moralise about the greed and mistakes made by bank bosses than to salvage the crucial sector of the economy.
King said: "I don't think I have been too academic. I think a knowledge of financial history is essential and I wish, if anything, I had turned to it earlier."
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