Let’s forget about Barclays for a minute. Even though the U.K. bank owns Lehman Brothers, trying to get Americans interested in a British banking scandal is like slipping them Ambien.

Here’s what everyone wants to know: What will be the cost of the LIBOR scandal to big North American banks like JP Morgan, Citigroup, Bank of America, and Royal Bank of Canada? Forbes predicted recently that the financial penalty of the lawsuits could make the $20 billion foreclosure settlement earlier this year “look like child’s play.”

The potential cost of LIBOR even made an appearance during Ben Bernanke’s Congressional testimony, a quarterly ritual of being implicitly, passive-aggressively blamed by our lawmakers-of-leisure about why the Federal Reserve isn’t doing more of what Congress used to do, which is to save the economy. This section of MarketWatch’s live-blog today caught my eye:

Sen. Herb Kohl, the Wisconsin Democrat, got a wince out of Bernanke when comparing the Libor scandal to the tobacco lawsuit.

 Bernanke says he doesn’t know what the cost will be — “we have to let it play out.”

There’s a reason Bernanke winced. The tobacco settlement came in at $246 billion over more than 25 years. If something like that hit the banking system, it might undo all the hard work Bernanke, Tim Geithner and Hank Paulson did in 2008 and 2009 to recapitalize the nation’s banks. As it stands, banks may be as much as $500 billion short of the money they need to have on hand to survive another financial crisis. So a LIBOR settlement in the hundreds of billions would not only crimp their style; it might seriously tear apart their finances.

One research report today takes a shot at that question. Keefe Bruyette & Woods, an investment bank that researches and advises other banks, released two pieces of research today trying to nail down the question: how much can the LIBOR scandal really cost the banks?

The answer is: surprisingly not much. How does $35 billion strike you?

In one research report, from Europe, KBW analysts estimated (speculated, actually) that on the $500 trillion of financial contracts that depend on the U.S. dollar and had interest rates based on LIBOR, the cost of a legal settlement to banks could be a measly $35 billion.

Oh, $35 billion sounds like a lot, sure. It’s more than the half-hearted $20 billion foreclosure settlement that, despite its enormous size, probably won’t even help many struggling homeowners. But $35 billion covers around 10% of the overall damage banks may have caused by allegedly rigging LIBOR.

The U.S. analysts at KBW released a chart today as part of a report tantalizingly titled “An Updated Look at Lenders’ LIBOR Liabilities.”(What, you don’t find that tantalizing? Weird.)

As you can see by the chart above, KBW studied JP Morgan (JPM); Citigroup (C); Bank of America (BAC) and Royal Bank of Canada (RBC).

The researchers found that, if the $35 billion industry damage holds,  JP Morgan would be on the hook for $4.8 billion; Bank of America at $4.2 billion; Citigroup at $3.1 billion; and RBC, a very modest $400 million**.

Let’s be clear about something: that’s peanuts.

JP Morgan, for instance, could lose up to $7 billion on its badly managed London Whale trade alone – and that was a few months of stupidity, not four years of alleged rate-rigging. Even with that loss weighing it down, JP Morgan was profitable this quarter.

The defense that banks will mount of that paltry sum is not that $35 billion is a lot of money, but that they can ill afford another financial hit. Banks are already hoarding safe assets like Treasury bonds because they need some security in a volatile market. And it doesn’t help that they’ll have to take the punches from the costs of a foreclosure settlement, a rough year for the financial markets and a credit crunch, a European crisis and the potential U.S. economic fiscal cliff.

It would be unfortunate, but it would also be well-deserved. If banks don’t want to pay the price for stupidity and lying, they shouldn’t engage in it in the first place.

**For those who are curious about how KBW reached its numbers, here’s how they did it: They started with the outstanding value of all derivatives contracts at all banks in 2010. The researchers examined all the derivatives contracts at the banks, then narrowed it down to many of those contracts were set in euros or dollars. (The current LIBOR scandal only concerns the contracts written in euros and dollars). Then KBW looked at how much of those derivatives were part of businesses that the banks provided to customers (that’s the line that reads “notional customer derivatives”). 

Then KBW assumed that U.S. banks pushed down LIBOR by .20%, or 20 basis points, on each derivatives contract for four years. KBW assumed the banks did that 25% of the time. Then KBW figured the banks would have to pay only 10% of the perceived “damages” from all this rate-rigging, and came up with a total settlement amount of $34.9 billion. You can trace the math above.