Banks may finally be participants in the right kind of collusion. In recent days, Barclays, Citigroup, Credit Suisse, Deutsche Bank, Royal Bank of Scotland and UBS each has socked away big sums for legal expenses, much of it related to currency rate manipulation. That suggests a multitude of US and UK regulators are working together on a rare single settlement.
In most cases, agencies join forces to censure or fine a single institution or, sometimes, a subset of a larger group. Consider, for example, the staggered agreements on London Interbank Offered Rate (Libor) and mortgage-backed securities. This time, however, regulators have the opportunity to rope in all the major players in one big penalty fiesta.
The scale of the fines seems to be taking clearer shape. In some earlier cases, the amounts discussed have swung in big, unexpected ways. Now, however, Citi sounds more convinced after recent conversations that an extra $600 million over its third-quarter litigation pot of $950 million will suffice. RBS and Barclays were both clear that the $640 million and $800 million they were shoveling respectively into legal reserves were for the forex investigations.
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Regardless of the individual payments, a group settlement with all concerned authorities would be welcome. Banks could collectively move past the matter and not have to worry about paying more for taking longer, as happened in the Libor case. Shareholders would breathe a sigh of relief. Co-ordination among regulators also would be a small but encouraging sign that they might be able to co-operate in a crisis. It's the singular sort of cabal to champion.
