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At first glance, the British bank HSBC’s agreement to pay $1.9 billion to settle a money-laundering probe seems like very good news. It is the largest penalty ever imposed on a bank; the U.S. government accused HSBC of transferring funds “through the U.S. from Mexican drug cartels and on behalf of nations such as Iran that are under international sanctions.” Furthermore, the settlement is a “deferred-prosecution agreement,” which means that U.S. authorities can resume the case if HSBC does not strengthen internal oversight and avoid similar violations for the next five years. (Most settlements between big Wall Street firms and the U.S. government remove the threat of charges for the violations; the firms then make the same violations again a few years later.)

Despite the impressive fine, the settlement still leaves much to worry about as regards Wall Street’s disproportionate power over the government. To begin with, while smaller companies’ executives are (justly) heading to prison for money-laundering for the brutal cartels, no HSBC executives have been arrested. Worse, though, is that “too big to fail” seems to have become “too big to indict.”

The New York Times reports:

State and federal authorities decided against indicting HSBC in a money-laundering case over concerns that criminal charges could jeopardize one of the world’s largest banks and ultimately destabilize the global financial system. …

Some prosecutors at the Justice Department’s criminal division and the Manhattan district attorney’s office wanted the bank to plead guilty to violations of the federal Bank Secrecy Act, according to the officials with direct knowledge of the matter, who spoke on the condition of anonymity. The law requires financial institutions to report any cash transaction of $10,000 or more and to bring any dubious activity to the attention of regulators.

Given the extent of the evidence against HSBC, some prosecutors saw the charge as a healthy compromise between a settlement and a harsher money-laundering indictment. While the charge would most likely tarnish the bank’s reputation, some officials argued that it would not set off a series of devastating consequences.

A money-laundering indictment, or a guilty plea over such charges, would essentially be a death sentence for the bank. Such actions could cut off the bank from certain investors like pension funds and ultimately cost it its charter to operate in the United States, officials said.

Despite the Justice Department’s proposed compromise, Treasury Department officials and bank regulators at the Federal Reserve and the Office of the Comptroller of the Currency pointed to potential issues with the aggressive stance, according to the officials briefed on the matter. When approached by the Justice Department for their thoughts, the regulators cautioned about the effect on the broader economy.

While actual criminal indictments remain relatively rare for major Wall Street firms, as the Times notes, “the threat of criminal prosecution acts as a powerful deterrent. If authorities signal such actions are remote for big banks, the threat could lose its sting.”

Already, “too big to fail” allows the biggest banks to act with impunity; if the idea expands to include “too big to indict,” banks would lose an effective restraint against engaging in  illegal activity. Since the 2008 crash, policymakers ranging from free-market champion Alan Greenspan to self-described democratic socialist Sen. Bernie Sanders have argued that “too big to fail is too big to exist.”

The emergence of “too big to indict” is another warning to the White House and Congress that it’s absolutely necessary to end “too big to fail.”