L’affaire Standard Chartered Bank (i.e., Iranian money laundering) takes center stage tomorrow with an expected meeting between senior bank executives and Benjamin Lawsky, superintendent of the New York Department of Financial Services.

Recall that Lawsky just last week unilaterally castigated the UK-based bank for brazenly and wantonly eviscerating state and federal banking rules against dealing with Iranian entities.

Lawsky one-upped the Federal Reserve, the U.S. Treasury and other regulators in his aggressive move against Standard Chartered. Regulators across the pond have been quick to condemn Lawsky and have certainly expressed their disgust to their counterparts in Washington.

Standard Chartered clearly is very concerned about the possibility of having its New York banking license revoked. As such, the likelihood of a negotiated fine coordinated on behalf of all regulatory agencies would seem to be increasing. What do I think of that?

Stop the music and the drama.

I think I would speak for an overwhelming majority of the public both here in America and in the UK and tell Standard Chartered: “Keep your money. There will be no fine. What there will be is a thorough independent investigation in pursuit of the truth.”

If it gets ugly, so be it. If we learn that Standard Chartered did not end run our banking rules, then good for them and they will be stronger for it. If we learn that our major regulatory agencies were slow to move against Standard Chartered for whatever reason (perhaps in return for similar treatment by UK regulators in dealings with US-based institutions), let’s air that laundry.

The last thing I want to see is a fine. Better that Standard Chartered pays not a penny than we suffer again from not truly knowing and learning the truth. A fine only serves to suffocate the truth. The public has been suffocated enough by fines against the likes of Wachovia, HSBC, Barclays Bank, UBS, Goldman Sachs and seemingly every other major financial institution. When a bank is merely fined for dealing with a rogue nation such as Iran, that payment is nothing more than blood money. A fine does not rebuild confidence but erodes it dramatically because the public is aware that the truth remains under wraps.

What rebuilds confidence? The truth. If the truth exposes ugly practices within Standard Chartered and similarly lax oversight from regulators, then so be it. A healthy serving of embarrassment is far less important than a rebuilding of trust and confidence for our global economy. In delivering the truth, the public and our global economy will be reinvigorated by fresh air filling our collective lungs.

Tim Geithner, Ben Bernanke, Mervyn King and others should all stand down and at long last let the truth stand up.

Will it happen? I’m not holding my breath — no pun intended — but the continued erosion of trust in our regulators, our financial institutions, and the markets comes with a price far greater than any fine that can be levied against Standard Chartered or any other bank.

UPDATE: They paid the fine.

Larry is a Wall Street veteran, having worked at such banks as First Boston, Bear Stearns and Union Bank. He blogs at www.senseoncents.com