Several former traders at UBS have been offered a deal by federal prosecutors in the unfolding Libor scandal, which if we had a criminal justice apparatus dedicated to accountability would be a moment of hope for the potential of going up the chain and indicting those who authorized the rate-rigging. Under the deal, the US would waive the traders from criminal charges in exchange for their cooperation in the investigation.

The leniency deal was offered to former traders and other employees who had relatively junior-level jobs at the Swiss bank, the person said.

No more than a few of the UBS employees under investigation for alleged interest-rate manipulation still work there, and the company has fired or suspended about 20 traders and managers as a result of the four-year inquiry, another person familiar with the investigation said. A Justice Department spokeswoman declined to comment.

The agreements with former UBS employees are a sign that the Justice Department is trying to persuade them to turn against the people suspected of leading the alleged interest-rate rigging at the bank, legal experts said. It isn’t clear who the biggest targets of the continuing probe are.

UBS already has a leniency deal in place for the company with respect to the antitrust division of the Justice Department, which is tasked with investigating collusion on rate-rigging (which has been alleged by the Barclays employee, when he said his bank wasn’t submitting an honest Libor mainly to keep up with the Joneses). Barclays and Deutsche Bank made similar leniency deals. The fraud section is supposed to be investigating individual criminal activities inside the firms, and that’s where this leniency deal springs from.

I have simply lost hope that the normal practices of criminal investigations apply when it comes to the banks. This ought to be good news, that the prosecutors are flipping the people at the bottom in an attempt to get to the people at the top. But beyond a cash settlement that will include a discount for early cooperation, I don’t think you should expect anything other than traders somewhat more senior than these traders getting arrested. And just the idea that a trader would go to jail for fixing prices but the bank would be immune from the same charge should indicate the hollowness of this approach.

This is an amusing sidelight:

The ex-Barclays traders considered vulnerable to possible prosecution include one who was promised Bollinger champagne as a reward for rigging Libor. Regulators said in June that another trader at the U.K. bank set a daily electronic calendar reminder to “SET 3 MONTHS US$ LIBOR LOW!!!!!!”

But Barclays gave prosecutors that email, so you know, they’re off with a fine.

I understand how this is designed to work, but there’s no faith on my part that it will actually work in that intended manner. Small fish flipping on other small fish is not really accountability for such a major crime.