Several weeks back, Standard Chartered Bank, caught engaging in multiple acts of money laundering, settled with the New York Department of Financial Services for $340 million. At the time I wrote that if the Treasury Department and the other federal regulators cannot get as much from Standard Chartered as the DFS, “it will be completely embarrassing.”

Apparently, Treasury is so in the tank for the banking industry that they have no problem going the embarrassing route.

Lawyers within the Treasury Department have recommended a preliminary settlement with Standard Chartered, clearing the path for the British bank to pay a penalty to state and federal prosecutors and to move beyond claims that it flouted laws governing international money transfers.

The lawyers approved a potential prepayment amount this week, a crucial step to a final agreement, though it will be much smaller than the $340 million the bank had to pay to New York State’s top banking regulator in a related case, according to three officials with direct knowledge of the settlement talks.

The differing penalties stem from determinations by federal authorities and Manhattan prosecutors that the bank’s suspected wrongdoing was much less extensive than the state banking regulator’s claims that Standard Chartered had schemed with Iran to hide from regulators 60,000 transactions worth $250 billion over a decade.

So the New York regulator asserted that Standard Chartered hid $250 billion in transactions. The bank denied it, claiming that they merely exploited a loophole in the statute. But then they paid a whopping fine to settle the charges. Now Treasury has their turn and obviously Standard Chartered sits in a vulnerable position. But Treasury has independently decided that Standard Chartered didn’t hide as much funds, essentially swallowing Standard Chartered’s argument whole. This is insane.

Treasury also will give Standard Chartered credit for coming forward with their own information about the transactions. This is despite the fact that Benjamin Lawsky, the head of the New York DFS, uncovered information showing that Standard Chartered hid the identity of its Iranian clients, lied to regulators and generally obstructing justice. But to Treasury they should get the equivalent of time off for good behavior.

This will end up being a joint settlement between Treasury, Justice and the Manhattan district attorney. That all this firepower couldn’t generate the same kinds of penalties as a relatively new financial regulator in New York State should tell you everything you need to know about the role of individual will in pursuing accountability against the banks.