Four years after Wall Street’s malfeasance dealt a telling blow to the economy, and long after tens of billions of dollars have been paid out for banker fraud, reports say that we’re about to see the first arrests of Wall Street bank employees. What’s more, the suspects work at JPMorgan Chase – a bank which, ironically enough, politicians and pundits insisted was the “good bank” after the financial crisis hit in 2008.

In fact, Chase CEO Jamie Dimon spent years speaking out forcefully against additional bank regulation. (Lately, not so much …)

Financial cases can seem complicated. What should we think about these recent announcements in the “London Whale” case?

1. It’s good that they’re finally making arrests.

Despite the overwhelming evidence of criminal behavior in a large number of cases, this will have been the first time since the financial crisis that a banker’s been arrested on criminal charges (assuming the arrests take place as planned, of course.)

Let’s be clear: These arrests are a good thing. Justice demands that anyone, no matter who they are, be made to answer for their deeds. What’s more, bankers at “too big to fail” institutions have the power to shatter, and even bring down, the global economy. The lack of arrests up to this point means there’s been no deterrent effect – no reason for them not to keep committing fraud.

But unless these arrests lead to further action – action that’s decisive and effective – they won’t nearly be enough.

2. This case doesn’t involve the events that led up to the crisis of 2008.

The “London Whale” case involves potential fraud in the London office of JPMorgan Chase in 2012. It doesn’t involve the large-scale fraud which contributed to the 2008 financial crisis, which until now has been the subject of settlements involving the SEC, the Justice Department, and (in the case of foreclosure fraud) most of the states as well.

Many of these settlements freed bank employees from the threat of criminal prosecution. The foreclosure fraud settlement left open the possibility of criminal indictments, but the President’s Mortgage Fraud Task Force has shown no sign of pursuing them – and time is running out.

3. These announced arrests involve low-level employees.

It’s reasonable to ask the question: Where are the “Big Fish” in the London Whale case? The “Whale” himself was a London employee of JPM named Bruno Iksil, who has been turned and is now working with authorities. The arrests involve someone who worked with him, and his immediate superior.

There is no word of any further investigation of the bank’s Chief Investment Officer, Ina Drew, who was forced to resign when the scandal broke. Nor has there been any discussion of CEO Jamie Dimon, who told investors on a conference call that the Whale case was a “tempest in a teapot” even while reportedly knowing that losses ran into the billions.

Smart and aggressive prosecutors typically arrest low-level figures in order to “turn” them and lead their investigation further up the organizational chain. While it would be reasonable for the Justice Department to remain silent on plans like these – if it has them – it will need to take that approach if these arrests are to produce any serious results or restore its credibility regarding Wall Street crime.

4. This was an outrageous and massive case involving the entire organization, from the top down.

The question of “turning” low-level employees is important in this case, since there is evidence pointing to the senior levels of the organization. The Senate Permanent Subcommittee on Investigations issued a report on this case which found damning up and down the Chase organization, all the way to the top.

(Some highlights of that report are in an addendum below.)

5. Chase was gambling with taxpayers’ money.

We no longer have the Glass/Steagall rule. And while the Dodd/Frank law places some restrictions on banks like JPMorgan Chase, they’re insufficient. JPM’s ‘too big to fail’ status also means that taxpayers are still implicitly on the hook for its bad bets – which could be much worse next time.

6. The bank will reportedly be required to admit wrongdoing in its settlement.

One of the ongoing outrages of previous bank settlements is the fact that lawbreaking institutions have been able to pay their fines and enter their settlements while "neither admitting nor denying wrongdoing" — despite what in many cases were massive amounts of incriminating evidence.

Reports say the SEC will demand that the bank admit wrongdoing in this case. As with the arrests, this is a good step in the right direction. But, as with the arrests, it calls for the right follow-up:

If wrongdoing took place, the individuals who committed the wrongs must be identified.

In addition to facing potential criminal penalties, they should be forced to disgorge the bonuses which they received as a result of their wrongdoing.

They should face any other appropriate civil and/or criminal penalties.

The bank must face severe penalties if these wrongs are committed again. (Banks have repeatedly agreed to cease certain forms of fraud in SEC settlements, only to keep committing them again and again.)

7. The public must remain vigilant.

There's no doubt that the public outcry over a lack of bank prosecutions had a powerful influence on the government, although we may never know how directly that led to these actions. While the administration deserves praise for taking these steps, the public must also ask that they be properly followed up .

These moves are a genuine move in the right direction. Now, additional action is needed to protect the public and restore the balance of justice. They can either be the first step toward real law enforcement, or an attempt to inoculate the public against real change on Wall Street. We're hoping it's the former, and that the public will insist on nothing less.

HIGHLIGHTS OF SENATE REPORT:

The bank deceived and stonewalled regulators.

JPMorgan Chase stonewalled their regulator, the OCC, providing it with almost no information on activities in Iksil's unit.

When the OCC finally complained about lax risk management in that unit, Ina Drew harangued its staff for 45 minutes about their "intrusive" questions.

As losses grew, Chase provided less and less information to the OCC.

As the investment site The Motley Fool puts it, "Dimon ordered the bank to omit critical CIO performance data from its standard reports to the OCC." Then Dimon "raised his voice in anger" when the CFO Douglas agreed to resume sending data to the OCC. When the OCC later found out about the Whale trade — by reading the newspapers — the bank responded to its request for information by giving them incomplete tables the OCC called "useless" and "absolutely unhelpful."

Then, for 10 days, the bank repeatedly assured the OCC that these trades were nothing to worry about." After that it "did not call, email, or otherwise update the OCC" as losses mounted to $1.6 billion.

The bank violated its own risk management procedures — which it had assured investors were in place.

The bank's own risk management rules and guidelines were violated 330 times.

The bank's Chief Risk Officer was never told of these actions, and first learned about them when he read about them in the newspaper.

As the Motley Fool notes: "Even though the CIO was a $350 billion unit, bank managers kept giving different answers when the Subcommittee asked who its Chief Risk Officer was in late 2011. It turned out that the position was vacant in late 2011."

The JPMorgan Task Force Report noted that "There was no official membership or charter for the CIO Risk Committee."

(Since Dimon had publicly bragged about the quality the bank's risk management, claiming it made JPM safer than other banks, weren't investors being deceived?)

Senior management was either complicit or asleep at the switch.

Iksil (the "Whale") gave a presentation to Drew's senior investment committee that seems to have pretty much explained what he was doing.

Drew later claimed she didn't understand it (and apparently didn't ask for an explanation).

They raised their risk limits to nearly three times the standard levels, with Drew's permission (which she later said she didn't remember giving).

Drew and her unit, unlike others, reported directly to CEO Dimon.

Bloomberg News, like other news outlets, ascribes the decision to exempt this unit from standard risk management controls to Dimon himself.

Follow Richard (RJ) Eskow on Twitter: www.twitter.com/rjeskow