The $550 million penalty that investment giant Goldman Sachs agreed to pay last week on a fraud case brought by the U.S. Securities and Exchange Commission sounds like a lot.

While it was one of the heftiest punishments slapped on a Wall Street firm, for Goldman Sachs it wasn't much at all. The penalty was 4.1 percent of the firm's profits in 2009 and 5 percent of the bonuses it paid to employees last year. After the settlement the price of Goldman shares rose, adding to the value of the bonuses paid in stock.

The firm also was not required by the SEC to declare its guilt. Instead, it owned up to its actions by agreeing to a court order barring it from committing intentional fraud under securities laws in the future. In other words, "I am not admitting I carried out fraud this time, but I do promise not to do it later."

So by paying out a small fraction of its profits, the firm emerged relatively unscathed and avoided an ugly and expensive public trial, which could have pushed down the value of its stock.

The outcome represents a success for Goldman chairman and CEO Lloyd C. Blankfein (2009 bonus: $9 million), who has been the principal face of Wall Street's role in producing the current recession.

Goldman Sachs was accused by the SEC of selling securities to clients based on subprime mortgages, while the investment firm also developed a security called Abacus 2007-AC1, which would make money if the subprime mortgages failed. This constituted, in effect, a bet against the subprime mortgage securities.

It was partly through this type of alleged double-dealing that Goldman was able to earn $13.4 billion in profits in 2009. It also received a $10 billion bailout from the Bush administration in 2008, which it paid back in 2009.

The real losers in the settlement, if approved by a federal judge, will be Goldman clients who took a licking on the subprime mortgage securities and U.S. taxpayers who financed the bailout and are still wallowing in the recession triggered in part by actions like Goldman's.

The SEC and Obama administration officials who approved the deal owed the American people better. This light slap on the wrist won't serve as a deterrent to further such offenses against the country.

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