Speaking at a CML lunch last week, Crawshaw warned that, without action, lending figures for 2008 could be half the £108bn total lent in 2007.
He called on King to co-ordinate central bank responses to the risks affecting the global markets.
Crawshaw said King needs to follow up on his recent hints to the Treasury select committee that he is prepared to be more flexible.
He said: “The main short-term palliative is in the hands of the Bank of England and there is an immediate need for broader-based action than we have seen.”
Crawshaw said that although he welcomes the Chancellor’s appointment of James Crosby to lead the credit crunch working group , the timescale of next autumn did not address the urgency of the market difficulties.
He called on the FSA to regulate in a “proportionate and focused way”, saying lenders sometimes feel that FSA communications are more alarming than reassuring in tone, failing in the FSA’s role to help market confidence.
Crawshaw said the Bank of England and the industry had differing explanations for what is causing the liquidity crisis. He said: “The bank has diagnosed the overhang of assets as the disease. We see it as a symptom. It believes that institutions are hoarding liquidity because they do not trust other banks and so are reluctant to lend to each other. We think lenders are hoarding liquidity because they are concerned about whether they will be able to access future funding and are managing pipelines of business very cautiously.
“They are worried less about the here and now and credit risk in the UK mortgage market than the uncertainty about whether they will be able to refinance their own maturing debt commitments and new mortgage offers that they are seeking to make.”