With a trial scheduled to begin next week before Judge Denise Cote of the U.S. District Court in the Southern District of New York, another of the banks being sued by State Comptroller Alan Hevesi has decided to settle. Mr. Hevesi, recall, is suing 17 banks that dealt in WorldCom stocks and bonds. From the perspective of pure, short-term business interest of an individual bank, settling is not a hard decision to understand. As Bank of America explained in announcing its decision late last week, “Under the settlement, Bank of America denied that it violated any law and explained that it settled the matter in order to eliminate the uncertainties, expense and distraction of further litigation.” As part of the settlement, the bank agreed to pay a total of $460.5 million to the New York State Common Retirement Fund that Mr. Hevesi runs, to other WorldCom stock and bondholders, and to their lawyers. Bank of America joins Citigroup, which had earlier settled for $2.575 billion.

Looking at this as a long-term matter and at the American economy as a whole, we have a hard time seeing the benefit when a bank that hasn’t violated any laws gets held up by Mr. Hevesi and his class action-lawyer friends for these sums of money. If Mr. Hevesi genuinely believes that Bank of America didn’t break any laws, $460.5 million seems like a pretty steep penalty. And if Mr. Hevesi believes that the bank or its officers did break some laws, it makes a mockery of justice for him to sign a legal document under which the bank makes such a denial.

It’s enough to tempt one to speculate that these proceedings aren’t so much about the rule of law as they are about enriching, via fees, Mr. Hevesi’s class-action lawyers, who also are major contributors to the comptroller’s campaign. The lawyers stand to make fees of more than $150 million from these settlements under an agreement signed by an aide to Mr. Hevesi following a year in which their law firms and individuals and committees with ties to them donated $121,800 to Mr. Hevesi’s campaign coffers.

Will the remaining banks that Mr. Hevesi is going after – they include J.P. Morgan Chase & Co., DeutscheBank, Lehman Brothers, Blaylock, CS First Boston, Goldman Sachs, UBS Warburg, ABN/Amro, Utendahl Capital Partners LP, Tokyo-Mitsubishi International PLC, Westdeutsche Landesbank, BNP Paribas, Mizuho International, and Caboto – stand firm and bring this case to trial? It’s a riskier route than settling, and might prove more expensive. But the firms just might win in court. And even if they don’t, at least they’ll be showing Mr. Hevesi’s lawyers that they’ll have to do some work to earn these outsized fees.

The alternative – the kind of settlement that Bank of America just went for – brings us all closer to a world in which any investor in a stock whose price goes down has a legal case not only against the management of that company, but also against that company’s investment bankers. This may be a world of which Mr. Hevesi and his lawyers want to be a part. But it’s not a world in which investment banking would be particularly fun or profitable, or in which capital would be readily accessible. More broadly, such a world wouldn’t be good for New York City, a point we reckon that Mr. Hevesi himself would acknowledge were some corporate lawyer bold enough to haul him onto the witness stand and press him on the point. After all, just last month, in a press release about New York City’s budget, the state comptroller referred to Wall Street as “the economic engine of the City.”