In the wake of this week's Freeh Report, the unthinkable suddenly became thinkable.
The thought that a college president, or athletics director, might do hard time for not reporting a crime that happened 11 years ago, became very real. Adding to pressure to indict Graham Spanier is the fact that he is a sociologist, founding editor of the Journal of Family Issues. (The anger I feel just writing that last sentence is palpable.)
What does this have to do with banking? Well, the more I learn about the LIBOR scandal, the angrier I get. The dam protecting big bankers from jail time may be about to break, just as it is breaking over Spanier.
The Financial Times estimates $22 billion in fines might result from this scandal, but folks are beginning to understand this is not something money can fix.
But wait, you say. This is something that happened in the last decade. The crime Freeh wrote about happened in 2001.
But wait, you say. This was done by traders, not by the CEOs. Please, the traders on the phone are just the Mike McQuearys in this case, this would not have gone on had the bosses done their jobs.
But wait, you say. Everyone was doing it - we can't jail all of them? In the Penn State case, there's even a criminal case made against the late coach Joe Paterno. If we could jail Joe Paterno for failing to report on a heinous crime, why can't we jail Jamie Dimon, who has been CEO of JP Morgan Chase (NYSE:JPM) since 2005? Why can't we jail Charles Prince, who headed Citicorp (NYSE:C) at that time? Or Lloyd Blankfein of Goldman Sachs (NYSE:GS)?
Actually that last is sort of facetious. The real big fish, the Joe Paterno in this scandal, would have to be Blankfein's predecessor. Hank Paulson was CEO when this manipulation apparently started, and he's also the Treasury Secretary who ran the 2008 bailout of "too big to fail" banks that followed the years of scandal.
Point is that alongside "too big to fail" we've created a second category - above the law. It has taken the most abominable horror to dump that principle in college athletics. Maybe LIBOR will create banking's Louis Freeh moment.
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.