In the following video, contributor Jessica Alling talks about the common misconception that fines levied against the big banks aren't an effective form of punishment for bank misbehavior. While the recent large settlements to come out of Bank of America (NYSE:BAC), JPMorgan Chase (NYSE:JPM), and Citigroup (NYSE:C) for $5.2 billion, $0.9 billion, and $1.3 billion, respectively, for damages they caused during the subprime mortgage lending crisis had a definite impact on the banks' bottom lines, Jessica tells us about one more tangible way these settlements hurt the banks: by shaking investor confidence.

Austin Smith has no position in any stocks mentioned. Fool contributor Jessica Alling has no position in any stocks mentioned. The Motley Fool owns shares of Bank of America, Citigroup, and JPMorgan Chase. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.