Corporate wrongdoers get break under Trump

In the final months of the Obama administration, Walmart was under pressure from federal officials to pay nearly $1 billion and accept a guilty plea to resolve a foreign bribery investigation.

Barclays faced demands that it pay nearly $7 billion to settle civil claims that it had sold toxic mortgage investments that helped fuel the 2008 financial crisis, and the Royal Bank of Scotland was ensnared in a criminal investigation over its role in the crisis.

The three corporate giants complained that the Obama administration was being unreasonable and stood their ground, according to people briefed on the investigations. After President Donald Trump took office, they looked to his administration for a more sympathetic ear — and got one.

Federal prosecutors and the Securities and Exchange Commission have yet to charge Walmart, and the Justice Department reached a much lower settlement agreement with Barclays in March, for $2 billion. RBS paid a civil penalty, but escaped criminal charges altogether.

The Trump administration has presided over a sharp decline in financial penalties against banks and big companies accused of malfeasance, according to analyses of government data and interviews with more than 60 former and current federal officials. The approach mirrors the administration’s aggressive deregulatory agenda throughout the federal government.

The New York Times and outside experts tallied enforcement activity at the SEC and the Justice Department, the two most powerful agencies policing the corporate and financial sectors. Comparing cases filed during the first 20 months of the Trump presidency with the final 20 months of the Obama administration, the review found:

A 62 percent drop in penalties imposed and illicit profits ordered returned by the SEC, to $1.9 billion under the Trump administration from $5 billion under the Obama administration.

A 72 percent decline in corporate penalties from the Justice Department’s criminal prosecutions, to $3.93 billion from $14.15 billion, and a 72 percent drop in civil penalties against financial institutions, to $7.4 billion.

A lighter touch toward the banking industry, with the SEC ordering banks to pay $1.7 billion during the Obama period, nearly four times as much as in the Trump era, and Trump’s Justice Department bringing 17 such cases, compared with 71.

Many Republicans in regulatory and law enforcement roles have resisted corporate penalties, suggesting that they unfairly punish a company’s shareholders for the misconduct of employees. Democratic appointees have more often maintained that shareholders wrongly benefit from ill-gotten gains, no matter who was responsible for them, and that tough penalties could deter future lawbreaking.

If the balance tilted toward a heavier hand in corporate penalties under former President Barack Obama — even as critics argued that his administration did not do enough to punish top bankers after the crisis — it began to swing in the opposite direction under Trump, the data show.

With the exception of the Commodity Futures Trading Commission, a small agency where a new enforcement director has presided over an uptick in penalties and a Trump-appointed chairman vowed “no pause” in enforcement, the new approach extends across the federal financial enforcement regime.