SWISS BANKS and politicians have greeted the long-awaited auditors' report on their handling of Holocaust victims' accounts with an unbecoming relief. The auditors, they note, turned up no evidence of an organized, systematic attempt by Swiss banks to cheat Holocaust victims' heirs of their rightful property or to hide records of the accounts' fate once investigators came sniffing.

That should shield Swiss banks from further legal liability and allow a previously arrived at $1.25 billion settlement with survivors to go forward if, as expected, a New York judge approves it. But the sorry history turned up by this three-year investigation is nothing for the Swiss to boast of. Rather than an exoneration, it is an occasion for Swiss shame.

The commission, chaired by former Federal Reserve chairman Paul Volcker, found records of some 54,000 accounts belonging to people who perished in the Holocaust: 20,000 accounts still in existence, 34,000 that were closed by the banks (with their assets going to bank profits or to the Nazis) but whose records wholly or partly survive. These are, to say the least, striking figures for a banking industry that swore in 1995 that it could find only 775 such accounts and that, two years later, published under pressure a further list of 2,000 "dormant" accounts whose owners the banks said they had been unable to locate.

But more important than the accounts themselves, or even the funds they contain--which by some calculations could now be valued at $700 million--is the abundant evidence of bad behavior by the supposedly neutral Swiss. Though short of any organized conspiracy, that evidence suggests numerous instances of stonewalling by individual banks--of desperate people during the war who tried to get their assets transferred to help other victims; of heirs after the war who were told no evidence of accounts survived. The handling of funds, the report says, showed a "widespread lack of diligence" and was "too often grossly insensitive to the special conditions of the Holocaust."

In short, Swiss banks and bankers failed to act with even rudimentary fairness toward the victims of one of history's greatest atrocities. That hardly amounts to exoneration.