Fear vs. Operational Risk

The FT reports that France's Finance Minister Christine Lagarde wants bigger penalties for banks who are found to have weak controls in the wake of the l'affair Soc Gen:

France’s banking regulator must be allowed to impose far higher fines on banks that fail to monitor carefully the risks taken by their market traders, according to a government report on the rogue trading scandal that has rocked Société Générale.

I can see that there is a profound sense that something must be done, but I doubt raising fine levels will do much good. If the risk of losing a few billion euros is not enough to persuade the banks to invest in solid controls then it is hard to see that fines will do much good. The reality is that we have not had a big rogue trader event in a bank since Leeson and Iguchi in 1995 - John Rusnak does not really count - so some banks have become complacent. The most effective pressure would be disclosure, but I rather fear that the only result of having to disclose supervisor's quality of controls scores would be to dilute their content.

As a side note, I wonder what effect the Soc Gen loss is having on industry operational risk loss databases. One would hope that it would be widening tail estimates and so capital would be going up.