We open the day by hearing about criminal indictments for bond traders.

Federal prosecutors are preparing to file criminal charges against former Wall Street traders alleging they misstated the value of mortgage bonds, an issue central to the 2008 financial crisis, according to people familiar with the matter.

The Manhattan U.S. Attorney’s office is planning to allege in a criminal complaint that several former traders at Credit Suisse Group AG, a major global investment bank, misled the bank’s investors by booking inflated prices of mortgage bonds to boost their bonuses, despite knowing the values of those securities had dropped, according to the people familiar with the matter.

Wow, this accountability thing is catching, no? Well, no. First of all, we have “rogue traders.” The bank itself is not being held liable. In fact, they are being indicted for ripping off the bank.

And another thing: this is a four year-old indictment that has just been hanging around. Credit Suisse issued this press release in 2008:

The Manhattan U.S. Attorney’s office is planning to allege in a criminal complaint that several former traders at Credit Suisse Group AG, a major global investment bank, misled the bank’s investors by booking inflated prices of mortgage bonds to boost their bonuses, despite knowing the values of those securities had dropped, according to the people familiar with the matter [...]

Following its revaluation review, Credit Suisse has determined that the pricing errors were, in part, the result of intentional misconduct by a small number of traders. These employees have been terminated or have been suspended and are in the process of being disciplined under local employment law. The review also found that the controls put in place to prevent or detect this activity were not effective.

So Credit Suisse threw these traders out four years ago in an act of self-policing (“Credit Suisse has determined”). I would understand the delay in the indictments if the US Attorney delved into the case more, found that this was routine at Credit Suisse or other banks, and made additional arrests, perhaps going up the chain to find out if anyone at the top authorized the mispricing of CDOs (it’s not really mortgage bonds we’re talking about here, or rather, that’s a secondary characteristic).

But no. After four years, the US Attorney just got around to indicting the same people Credit Suisse handpicked as responsible. And these indictments come down just as the Administration wants to prove their bona fides on financial fraud, with their shiny new task force and everything.

Here’s Yves Smith.

So here we have an almost four year lapse in filing charges against (per the Financial Times) two low level employee-miscreants that allegedly produced $2.8 billion in losses. And the clever bit here is that even though no one now expects the employees to be able to shift blame to management, as in prove that their conduct was sanctioned, or at least not hidden, it will be a foreign bank and not an American one that would be embarrassed by the revelations.

Yves goes on to add that mispricing of CDOs would be an important area of inquiry, but a serious investigation would take in most of Wall Street, so if it’s two lower-level employees here and two more there, you know that any subsequent investigation is not all that serious. CEOs and CFOs, which have to verify that their internal controls are adequate under the Sarbanes-Oxley Act, would have to feel the heat for something real to be happening.

I wouldn’t get my hopes up about that.