Deirdre McMurdy

Its name may be splashed across the headlines, but the latest international banking flap isn't really about Standard Chartered. It's about what happens when the wellspring of public trust has been thoroughly poisoned.

As it stands, the London-based bank may — or may not — be guilty of "willful non-compliance" of clear U.S. rules for dealing with Iran. Standard Chartered may have laundered as much as $250 billion in 60,000 transactions conducted for Iran's central and commercial banks.

Standard Chartered officials admit they may have done a few dodgy deals, but they adamantly insist they've done nothing on the scale alleged by Bernard Lawsky, the newly appointed head of New York's newly created Department of Financial Services.

Which brings us to the whole subject of the allegations and how they were handled.

Depending on whom you believe, Lawsky has either behaved prudently in the best interests of the public or he has prematurely and irresponsibly shot off his mouth, doing considerable damage to Standard Chartered's reputation — and stability — in a brash bid to prove he's a badass state bank regulator.

To be fair, there have been so many shocking banking sector scandals of late, it was only a matter of time before someone decided to make an example of one bank by putting on the regulatory equivalent of a gun show.

In the U.S. (not surprisingly) there are plenty of heavyweights in Lawsky's corner, including Arthur Levitt, former head of the U.S. Securities and Exchange Commission and Neil Barofsky, who oversaw the U.S. Troubled Asset Relief Program (and then trashed the U.S. Treasury in a tell-all book).

Still, no less than the Governor of the Bank of England and the Mayor of London have been publicly critical of the way Lawsky has handled his new role. The former sniffed that Lawsky appears to have gone rogue, violating some apparent gentleman's agreement about how to handle banking scandals. The latter suggested it's a vicious plot by New Yorkers to undermine London as a global financial capital.

There'll be more drama before, during and after an administrative hearing scheduled for August 15. The wrangling is likely to get more intense because of some allegedly disparaging remarks about Americans in Standard Chartered e-mails. Given the complexity of global financial transactions — especially where fraud and money laundering play a starring role — that's saying something.

But one thing that no one is really saying about this whole smack down is that it's a battle for redemption between two profoundly discredited institutions: government and big banks. Which it most certainly — and most ironically — is.