Justice for the rich should be time not money

Bank of America has agreed to pay some $17 billion (€12.7 billion) to settle and close investigations by US regulators; the settlement sum will set a new record. Last year, JP Morgan Chase paid $13 billion for a similar offence – misleading buyers of mortgage-backed securities before the 2008 financial crisis. In Bank of America's case, the payment will be split between a cash fine and some compensation for homeowners.

Since the financial crisis a common feature of the prosecution of US banks and major corporations for serious regulatory and related offences has been a failure to press criminal charges against either the institutions or their top executives. The prosecuting authorities, aware of the higher level of proof required for a criminal conviction, have invariably taken the easier option. Instead they seek large financial settlements from the banks, rather than prison sentences for the offending bankers. This happens despite nominally reputable banks engaging in a range of illegal and disreputable activities – whether by facilitating money-laundering and tax evasion or by rigging interest rates to boost profits and defraud customers.

Earlier this month, Bernie Ecclestone, chief executive of Formula One, who faced bribery charges in Germany, unexpectedly walked free. He was acquitted, having agreed to pay €75 million to the Bavarian court to drop the charges against him. He secured his acquittal by – quite legally – making the court a financial offer it was quite happy to accept. In the US the settlement terms agreed between the regulators and the banks have often involved deferred prosecution agreements, where financial settlements are agreed but no formal admission of wrongdoing is conceded. Like Mr Ecclestone, these institutions too emerge without an apparent legal stain on their corporate character. Justice may well have been discharged according to the law but has not been seen to have been done. And public confidence in the justice system is diminished.