Byline: Dan Gross
Why the biggest banks are a[umlaut]getting off easy.
the banks are on the run. Wall Street went all out on a Romney victory--and lost. Elizabeth Warren, perhaps the fiercest critic of banks in public life, is about to assume her seat on the Senate banking committee. And global financial regulators are in high pursuit: HSBC, the London-based bank, in December agreed to pay $1.92 billion to settle charges of money laundering; UBS agreed to pay a $1.5 billion fine for its role in conspiring to fix a benchmark interest rate, the London Interbank Overnight Rate (LIBOR); and in the U.S., regulators led by the Office of the Comptroller of the Currency, a supine agency during the Bush years, were making headway on a reported $10 billion deal with 14 banks over abusive and improper mortgage-foreclosure practices.
And yet. Despite the zeroes attached to the settlement figures, big banks are not being prosecuted to the full extent of the law. A small-time money launderer in bed with the Mexican mob would be packed away to federal jail for a few decades. But HSBC escaped indictment, and none of its employees was charged altogether, even though it was engaged in activities straight out of a James Bond film. A similar dynamic is at play in the LIBOR investigation. You don't need a code of ethics or compliance officer to know that messing with a benchmark like LIBOR is remarkably damaging. And although two UBS traders were indicted for their role, the LIBOR scandal is likely to result in more financial pain than hard time. "Given the magnitude of the bankers' …