This report first appeared on Policy Shop.

Panelists at the annual Corporate Crime Reporter Conference in Washington, D.C. Friday said they were concerned that the Justice Department is abandoning full criminal prosecutions of financial industries in favor of Deferred and Non Prosecution Agreements (DPAs and NPAs), which usually involve a fine and a set of conditions that must be followed. The company in exchange does not get prosecuted for criminal activity.

DPAs and NPAs exploded in the 2000s and have redefined the legal system in which financial corporations operate. Twenty years ago, the Justice Department had two choices, which it calls ‘up or down decisions’: it could prosecute a company or not.

Now, agreements fill the space in between these two options and allow the Justice Department more flexibility in how it grapples with illegal activity in the financial sector.

Denis McInerney, a deputy assistant general for the Criminal Division and panelist at last week’s conference, is a defender of these agreements. The ‘up or down decisions,’ he says, do not involve compromise and reduce the Justice Department’s actions to two extremes.

“You either indict or ignore companies,” he says. “There’s no middle ground.” DPAs and NPAs, he says, allows the Department to monitor and influence a company’s future actions.

But these agreements, says David Uhlmann, another panelist and former chief of the Justice Department’s Environmental Crimes Section who is now a law professor at the University of Michigan, are now weak and act like a membership fee companies can pay to continue fraudulent behavior.

“If the Justice Department believes that a criminal prosecution is warranted,” he says, “it should bring charges. I’m not suggesting that there is no punishment [with DPAs and NPAs]. What I’m saying is that there is less deterrence, less punishment.”

Uhlmann points out that these settlements are unique to the Criminal Division. The divisions of Environment and Natural Resources, Tax and Antitrust, for example, issued fewer than 20 DPAs and NPAs between 1992 and 2013, according to figures that were compiled at the University of Virginia School of Law. The Criminal Division, on the other hand, entered into about 100.

Many, Uhlmann says, are unwarranted. The USBC scandal from December of 2012 is the most recent illustration of how serious offenses, which were repeated many times over a period of five years in this case, are largely ignored. Media extolled the record fine of $1.9 billion that USBC had to pay as a part of its settlement.

But that won’t bankrupt HSBC, a company that dealt directly with Mexican drug cartels in an effort to launder money it received from Iran. In fact, it doesn’t change much of anything in the company—HSBC’s chief executive Stuart Gulliver received a £2 million bonus in March.

The exceptional treatment of crime on Wall Street, Uhlmann says, distorts what he calls the “expressive value” of law enforcement.

“We send a very strong and important message when we label conduct as criminal,” he says. DPAs and NPAs offer “no guilty plea. There is no sentence. We take something essential away” from the justice system.

The agreements are fueled by the Securities and Exchange Commission’s Consent Decree, which allows financial corporations to “neither admit nor deny” wrongdoing in the settling of a case. The SEC, using its own discretion, can choose not to prosecute if it finds that the costs of litigation are too high and not worth its time.

It’s a useful tool for minor offenses. But these decrees are now regularly used and shield financial companies from admitting to any alleged crimes. Many judges argue that if there is evidence pointing to illegal activity the SEC ought to be required to litigate.

“Parties settle for a variety of reasons,” Judge Marrero said at a hearing in New York last month when he was asked to approve a $600 million settlement between the SEC and CR Intrinsic Investors, a unit of the hedge fund SAC Capital Advisors. “Among them to avoid undue expense, undue business exposure, to save the cost of approving culpability. A government agency may deem it appropriate to agree that the defendants not admit or deny allegations in the complaint.” “But that too needs to be put into context,” he continued. “A defendant charged with, for example, wrongful conduct amounting to $10 may be prepared to settle for $3 if not allowed to admit or deny the allegations. At the same time, the agency may deem it appropriate to settle if it would cost $5 to litigate and there is a risk of losing. But there is something counterintuitive in a party agreeing to settle a case for $600 million that it might cost it let’s say $1 million to defend and litigate if it truly did nothing wrong.”

In other words it is suspicious that a company would settle for hundreds of millions of dollars when the purpose of the consent decree is to avoid prosecutions that are minor and not worth pursuing. A huge settlement like CR Intrinsic Investors means that there probably was wrongdoing, but in the end there is no formal charge and little media attention — a company “neither admitting nor denying” something is not very exciting.

In the end, says panelist and president of Public Citizen Robert Weissman, “the approach is failing. Almost all of the pharmaceutical cases involve repeat players,” he says about companies that violated laws, paid fines and then violated the laws again without really changing the way they do business. “HSBC was a repeat player. Barclays was a repeat player. Not only is there no broad deterrent effect [with DPAs and NPAs], evidenced by massive corporate wrongdoing, but there’s not a specific deterrent effect because the same companies engage in the same kinds of misconduct.”