While corporate watchdogs hailed the record $2.5 billion settlement paid by Deutsche Bank to U.S. and U.K. authorities for its rate-rigging role in the massive LIBOR scandal, some noted that the fine—while large—suggests that some institutions are still considered “too big to jail.”
Authorities announced Thursday that Germany’s biggest bank would pay $2.5 billion in penalties, a record for cases involving interest rate fraud, which have already targeted banking behemoths like Barclays and UBS. Officials said the wrongdoing at Deutsche Bank lasted from 2005 to 2011 and touched employees in London, Frankfurt, New York, and Tokyo.
“Surprisingly, despite the severity of these offenses, the government concluded that these crimes should be punished only through a financial penalty.” —Bartlett Naylor, Public Citizen
The New York Times reports that Deutsche Bank “also agreed to accept a criminal guilty plea for the British subsidiary at the center of the case. It is the most significant banking unit to accept a criminal plea in the long-running investigation into the manipulation of the
London interbank offered rate, or LIBOR.”
The LIBOR rate is an average of what banks charge for lending to each other. In addition, it sets a benchmark for interest rates for trillions of dollars’ worth of loans around the world—from mortgages and student loans to credit cards and complex derivatives.
The penalty follows a seven-year investigation into how some of the world’s largest financial institutions secretly conspired to rig benchmark interest rates to their benefit.