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When is crime not a crime? When a banker commits it

As befits the august Governor of the Bank of England, Mark Carney even manages to explode with rage in a measured sort of way. It is plain that he's furious. It is also clear that he's choosing his words with a certain care.

So here was Mr Carney passing judgment on the Lloyds bankers who decided to cheat the taxpayer on the deal designed to bail out the Lloyds Banking Group. "Such manipulation is highly reprehensible," said the Governor in a letter to the bank's chairman, "clearly unlawful, and may amount to criminal conduct on the part of the individuals involved."

At this point, a public all but inured to the ways of the British elite might still wonder how Mr Carney managed the hop from "clearly unlawful" to "may amount to criminal". In the long aftermath of the great banking crash we still await a definition of fraud recognisable in the real world. But in this case, as heinous as it was brazen, Lloyds has been caught bang to rights.

April 2008: the Bank of England creates a "special liquidity scheme" (SLS) to funnel cheap money to the banks. The idea is that they can exchange troublesome mortgage-backed securities for solid Treasury bills. In its three-year life this SLS will be worth £90 billion to Lloyds. Fees are due, however, to the BoE (us, in essence) under this scheme. The

scale of the fees is to be dictated by

a thing called the Repo rate. At Lloyds, certain bankers promptly say "Dear me, no" and collude to rig the rate.

In the gaudy annals of 21st-century banking scandals, this one is in a class of its own. Lloyds is 24 per cent owned by the state. It only exists because the Government volunteered the rest of us to pay, as we are still paying, for the SLS and all the rest. Close to £20bn of public money went on the purchase of shares in this one institution. The response, almost a reflex response, was to cheat the benefactors. They mugged the Good Samaritan. And they did it simply because they could.

Lloyds has been punished, of course, in a small way. For Repo and for its part in the collective debauching of the London Interbank Offered Rate (Libor), a scam which saw the cream of British, European and American banking fiddle rates and misrepresent their creditworthiness, the group has been hit with fines of £218 million. Thanks to the Repo fraud, it has been forced to repay another £8m to Mr Carney's institution. Seven employees have been suspended.

No one has been arrested, of course, and that fact no longer causes the slightest surprise. Five years after the great unravelling, after bank failures, PPI, sanctions-breaking, money laundering, Forex, Libor and Repo - not to mention perennial controversies over bankers' "rewards" - prison remains the sanction that works for everyone save those who cost the public at least £141bn directly during the crash, and then caused Britain's net debt to increase by over £1 trillion.

In the United States, the jail-time score thus far is one, in the person of Kareem Serageldin, a Credit Suisse executive handed 30 months for concealing mortgage securities losses.

In Britain, the Serious Fraud Office has been applying itself to the Libor conspiracy since the summer of 2012. Thus far it has failed to pin a charge, never mind the obvious charge of defrauding customers, on any executive.

True, the Banking Reform Act received its Royal Assent last December. True, this provides for "a criminal sanction for reckless misconduct" if you happen to bring down a bank, even if no one is quite sure how "reckless" would or could be defined. But what might commonly be called fibbing and fiddling still does not attract the attention of police and prosecutors. On both sides of the Atlantic "settlements" and fines, some of them vast, remain the preferred weapons in the face of crookedness.

Hence, perhaps, Mr Carney's agility in the vicinity of an ambiguity. "Clearly unlawful," he cries over Repo, but criminal? That's a maybe. A pedant would probably accept the quibble that, while every crime breaches the law, not every breach of the law counts as a crime. It depends on your criminal law or, in Britain's case, a willingness to apply the established laws, whether Scottish or English, covering fraud.

Still, a £218m fine imposed by regulators on both sides of the Atlantic has to hurt a bit. The £290m imposed on Barclays for Libor rigging, like the £390m extracted from RBS, must have been most unwelcome in the boardrooms. But who really suffers these condign punishments? Not, in their pockets, the individuals responsible.

Bob Diamond, the then Barclays chief executive, might have seen his lucrative career curtailed amid his bank's numerous scandals, but neither he nor Fred Goodwin ever had to worry about personal liability.

Vince Cable, the Business Secretary, last year suggested fraudulent or negligent directors should be made liable for a company's debts, but the notion was dismissed as an assault on entrepreneurship. Besides, given the kind of fines now in fashion, who has that kind of money?

"Shareholders" would be the answer. If, as in the case of Lloyds or RBS, the state happens to be the most significant shareholder of all, the argument acquires a neat sort of symmetry. So the British taxpayer forks out billions to save Lloyds.

The bank shows its gratitude by ripping off the taxpayer. On the taxpayer's behalf, as Britain's share of the fine, the Financial Conduct Authority hits Lloyds for £105m. Then the taxpayer-supported bank pays off the taxpayer. And no one goes to jail.

Mr Carney's semantically correct outrage might also be influenced by the belief, expressed back in May, that imprisoning bankers for market manipulation "will not be sufficient to address the issues raised". In a speech in London, he called for more reforms in the banking sector instead, and for a renewed "social contract" between bankers and society. The Governor did not refute the notion that jailing a few individuals couldn't hurt.

What does the lack of prosecutions signify, after all? It shows, cliche or not, that there truly is one law for the many and another law, if law is the word, for the few. The scandals are endless, the punishments few and derisory. Entrenched defiance over bonuses, even in the worst of times, is proof enough that it will take more than a "Hippocratic" oath for bankers - a quaint suggestion by the ResPublica think tank - to restore Mr Carney's social contract.

With enforced provisions for past "mistakes" falling steadily, Britain's big five banks are heading back to the realms of big money. RBS has already shown as much with a near-doubling in pre-tax profits, at £1.01bn, for the second quarter of the year. The rest will follow soon.

These institutions face a bit more regulation than they did before the crash. They face more public scrutiny than they have ever faced. But in their world any sanctions still arrive in the only language they understand. Someone else's money still talks the loudest.

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