According to The Economist, fines for bank behavior leading to the 2008 financial crisis (and beyond) now total around $100 billion (in the US and Europe).
But the magazine complains about a climate of fear: it says the settlements don't reveal what the banks did wrong and that they are agreeing to pay only because it's better than facing a criminal indictment and going to court - which could destroy their business, even if they found not guilty. The result?
“Besides raising costs for banks and their clients the current climate of fear poses a number of longer-term risks to the financial system. The first that big banks will be less ready to buy units of failed rivals as JPMorgan and others did during the financial crisis. That will make future crises more difficult to manage. As worrying is that banks are being discouraged from confessing to wrongdoing or sharing concerns with regulators. That may make it more difficult for supervisors to assesses future risks. And without any proper accounting of banks’ sins, no one will ever know whether just has been done. ”
This may be true. But what The Economist doesn't say is that banks have brought it on themselves for causing huge economic damage, paying bonuses to themselves for failure, stonewalling banking reforms, and showing no leadership in cleaning up their own industry. Public perception of a lack of accountability in banks can be more toxic than fuzziness about the fines.
