Tourists wouldn't notice it: Any manipulation of foreign currency exchange rates might add a fraction of a cent in paying for a meal at a Parisian bistro or booking a tour at the Great Wall of China.
But multiply that by $5 trillion — the amount that trades every day on the massive foreign currency markets — and it adds up to serious money for currency traders and even problems for multinational corporations.
Allegations Wednesday that major U.S. and European banks manipulated foreign exchange rates gave another serious black eye to the banking industry and another blow to public confidence in the financial system.
In a cross-border sweep, U.S., British and Swiss authorities accused JPMorgan Chase & Co., Citigroup Inc., Bank of America Corp. and three other global banks of rate-fixing, and the banks agreed to pay about $4.3 billion in fines to settle the cases. The others are HSBC Bank, the Royal Bank of Scotland and UBS.
The penalties, which include the largest ever issued by Britain's Financial Conduct Authority, are part of civil, criminal and regulatory investigations stemming from alleged banking industry misdeeds leading up to and through the Great Recession.
And legal action is expected to continue: Barclays Bank in Britain and Deutsche Bank in Germany are in settlement negotiations. The Justice Department, meanwhile, has started a criminal investigation into foreign exchange matters.
Barclays said Wednesday that it had "engaged constructively" with regulators and considered a settlement on closely similar terms. "However, after discussions with other regulators and authorities, we have concluded that it is in the interests of the company to seek a more general coordinated settlement," the bank said.
The fact that many of the banks involved in the foreign exchange, or forex, rate scandal previously signed criminal settlements over violations elsewhere has critics calling for tougher action against what they call recidivist banks.
"When you have the same banks being prosecuted over and over and getting civil fines over and over again, it looks like enforcement isn't working," said Brandon L. Garrett, a University of Virginia law professor and author of a just-published book on corporate prosecutions called "Too Big to Jail."
Indeed, the long list of financial industry misdeeds already settled has grown alarmingly and cuts across institutions, markets and international boundaries.
Prosecutors and regulators have racked up billions in settlements in such scandals as HSBC Bank's alleged money laundering for Mexican and Colombian drug cartels, JPMorgan Chase's mishandling of the massive Bernard Madoff Ponzi scheme and Barclays' and other banks' alleged manipulation of the benchmark London Interbank Offered Rate, or Libor, the base for many consumer and commercial loans.
Since 2010, the six largest U.S. banks — BofA, JPMorgan Chase, Citigroup, Wells Fargo & Co., Morgan Stanley and Goldman Sachs Group Inc. — have paid more than $128 billion in fines and settlements related to the subprime mortgage meltdown, according to SNL Financial.
In the forex case, authorities alleged that starting in 2009, banks colluded with one another to manipulate two currency benchmarks that are used to establish the relative value of various currencies — the dollar versus the euro, for example — for the trading day.
While exchange rates fluctuated during the day, regulators said, the benchmark prices are determined by the prices at one time each day, setting what the industry calls the fix. The fix, for instance, for the most widely used benchmark, known as World Markets/Reuters Closing Spot Rates, is set at 4 p.m. London time.
According to regulators, traders communicated secretly in computer chat rooms to share confidential client information about their trades in advance of the fix and delayed or otherwise altered their trades to push prices in ways that would benefit themselves or their banks.
The tight-knit groups of currency traders at various banks shared information, regulators said, and used code names to identify clients as, for example, the players, the 3 musketeers, a co-operative, the A-team and 1 team, 1 dream, Britain's Financial Conduct Authority said.
The tenor of the chat room conversations was casual and flip, demonstrating how commonplace collusion and manipulation had become.
"Don't want other numty's [novices] in the mkt to know but not only that is he gonna protect us like we protect each other?" one trader said in a chat, regulators alleged.
"i'd prefer we join forces...perfick... lets do this ...let's double team em," said another.
Some of the manipulation occurred at the same time it was publicly known that regulators were already investigating possible manipulation of the Libor.
"Firms could have been in no doubt, especially after Libor, that failing to take steps to tackle the consequences of a free-for-all culture on their trading floors was unacceptable," said Tracey McDermott, the British regulator's director of enforcement. "If they fail to do so, they will continue to face significant regulatory and reputational costs."
Jaret Seiberg, a Washington policy analyst for Guggenheim Partners, said there is a "real threat" that the Justice Department will file criminal charges against the traders and even the banks themselves.
"It seems hard to understand how management at these banks could have been unaware of the practice," Seiberg said. "To us, criminal charges seem likely given the duration of the alleged crime and the compliance systems that were supposed to be in place."
Some observers said the huge penalties imposed recently on banks are having an effect.
"The winking and nodding and code words and trying to fix the markets has fallen into cultural disfavor," said Bert Ely, an independent industry analyst. "How long that will last is anyone's guess."
Others say the fact that banks are repeatedly caught misbehaving, even after a series of criminal and civil settlements, suggests that enforcement simply isn't tough enough and that banks now see the penalties as another cost of doing business.
"What it tells you is that there is a culture at the global banks that has no fear of prosecutors or regulators catching them, or if catching them, of meaningfully punishing them," said Dennis Kelleher, chief executive of Better Markets Inc., a Washington nonprofit advocate of stricter financial regulation.
"If the biggest downside for a bank is that you have to pay a fine — with shareholders' money that you get to deduct from your taxes — that is the definition of incentivizing more lawbreaking and crime," he said.