JPMorgan’s London Whale fine is excessive and political

September 18, 2013, 5:09 PM UTC
Hasn’t this man paid enough?

FORTUNE — JPMorgan Chase is shelling out $800 million for punching itself in the face.

That’s how much JPMorgan is reportedly going to pay, give or take $100 million, to the Securities and Exchange Commission and other regulators to settle charges that it did something wrong in connection with last year’s multi-billion trading blunder that is commonly associated with a particular large sea mammal. The actual settlement has not been disclosed. Both the SEC and JPMorgan declined to comment.

It seems like a lot of money, in part because it is, but especially when you consider what JPMorgan (JPM) actually did.

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It certainly was something to stop and gawk at. The London Whale’s $6 billion loss was big and was also made by the one of the two banks we all thought was too smart for these types of mistakes (the other being Goldman Sachs (GS)). But let’s put this in perspective: No clients were ripped off by the London Whale’s $6 billion loss, or lost money. No clients were even involved. The bank lost $6 billion of its own money, or maybe money that was given to it by depositors. But depositors didn’t lose any money either. Neither did the government. JPMorgan was never in danger of needing to be bailed out. The bank has $200 billion in capital to use to cover losses such as these, and it did.

The only party that lost out was JPMorgan, and maybe its shareholders. But even the shareholder-as-victim scenario is debatable. JPMorgan’s stock is up 35% since it revealed the losses. I guess you can argue the stock would be even higher without the losses. But the bank is trading at slightly over book value at a time when few other big banks are, and when people are still a little skeptical about the big banks books.

JPMorgan, too, is required to keep track of its traders and its money. It’s also not supposed to lie to shareholders. And JPMorgan was forced to restate some of its earnings, so shareholders may have felt misled. But the Justice Department and the SEC in their cases against the traders make it clear that the government believes JPMorgan’s executives were also lied to.

So yeah, JPMorgan did something wrong, but what’s that worth?

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I don’t know the answer, and neither does anyone else. What we have are comparisons. European regulators fined UBS (UBS) $50 million for failing to supervise Kweku Adoboli, the rogue trader that cost that bank $2.3 billion. This is simple math, but $800 million is a lot more than three times $50 million. French regulators don’t appear to have fined Societe Generale (SCGLF) anything for the $4.9 billion loss it had from rogue trader Jerome Kerviel.

Three years ago, the SEC charged Goldman $550 million, which at the time was the largest fine the SEC had ever imposed, for its role in selling the designed-to-fail subprime mortgage bond Abacus. But Goldman’s clients were defrauded out of money in that instance. The Libor fines have been even bigger. But that was a case of manipulation of a widely traded and important interest rate. In JPMorgan’s case, the SEC isn’t alleging manipulation, and no one had ever heard of the IG9 before the London Whale.

Perhaps a better comparison would be to an accounting fraud, since that’s basically what the SEC is alleging, that JPMorgan didn’t keep its books accurately. But even in Enron, the massive accounting fraud of the early 2000s, the SEC only leveled about $350 million in fines, and much of that was paid by banks that helped Enron, not the firm itself.

“$800 million is clearly significant in a case that doesn’t look like the financial crime of the century,” says Columbia University law professor John Coffee. “It’s more like the blunder of the decade.”

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Clearly, the SEC is trying to show that it is being tougher than it used to be. Indeed, on Tuesday the SEC fined 22 hedge funds for a trading strategy that didn’t cost anyone anything. It might have actually benefited the market.

The agency is in a period of adjustment on how it administers punishment. And it’s reacting to criticism in the past that its fines were too small to make banks change their behavior. And that banks were allowed to get away without admitting or denying that they did anything wrong. (JPMorgan is said to be admitting some wrongdoing here, but probably to a relatively minor offense.)

The opposite of that: Make the fines the big banks pay be really big no matter what the crime. The problem is these big fines start to look like payoffs, especially as in the case of JPMorgan, where no top executives were accused of any wrongdoing. And the payoffs are so large that only the big banks can afford them. Is that a better way for justice to be served?