The huge fine levied on UBS for manipulating Libor makes as little sense as the fine levied six months ago on Barclays for the same offence, except in so far as it is bigger, reflecting the bigger scale of the bank and the fraud. But a fine at almost any level is self-defeating. Even the $1.5bn that UBS must pay will be too small substantially to affect the giant bank's bottom line, and it could end up penalising the very customers hurt by the original fraud.
Those bankers who manipulated Libor had perverse incentives to do so. The only meaningful punishment would be one that gave the unwitting victims proper redress, named names and entailed loss of fortune and freedom. Unlike the US, Britain has been reluctant to see bankers arrested, let alone sent to prison, for anything short of almost bankrupting their bank (and only then if they are junior enough). That is a gentility that has to change.