(Slate) – Not so long ago, federal prosecutors were simply terrified by the idea of what might happen if they ever brought criminal charges against a major bank. They worried that the consequences of a felony conviction might cause a large financial institution to collapse and wreak havoc on Wall Street, much as the accounting firm Arthur Andersen went bust after it was convicted for its role in the Enron scandal.
So the Department of Justice and the Securities and Exchange Commission landed on a compromise. When bankers got caught doing something illegal, the government asked them to pay a hefty fine and sign a “deferred prosecution agreement,” in which they promised to mend their behavior forever more. The government lawyers got to trumpet billion-dollar penalties. The banks got to go back to their businesses without much long-term damage. For everyone else, it was pretty clear Wall Street had simply gotten “too big to jail.”
Lately, the government’s lawyers have gotten a little braver. Attorney General Loretta Lynch announced Wednesday that four of the world’s largest banks had pleaded guilty to criminal charges that their traders had conspired to fix the massive and poorly regulated foreign exchange market. Citigroup, JPMorgan Chase, Barclays, and the Royal Bank of Scotland all admitted to being felons. Meanwhile, Switzerland’s UBS, pleaded guilty to manipulating the benchmark Libor interbank lending rate. The five banks are ponying up $5.6 billion in fines.