Financial penalties against banks and large companies accused of wrongdoing have dropped sharply under the Trump administration compared with those doled out under former President Barack Obama, according to a recent analysis of government data by The New York Times and outside experts.
A comparison of cases filed under the final 20 months of the Obama administration and the first 20 months under President Donald Trump found that the Securities and Exchange Commission (SEC) and Justice Department — which The Times noted are “the two most powerful agencies policing the corporate and financial sectors” — experienced a drop off in enforcement activity.
A brief summary of the findings:
> — 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 similar 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.
While career officials within the agencies continue investigating potential malfeasance among companies both big and small, political appointees have brought with them a “philosophical shift in governing that favors big business and prioritizes the interests of individual investors.”
> 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.
> The SEC, an independent agency composed of a bipartisan group of presidentially appointed commissioners, is less subject to political considerations. The leaders of the agency’s enforcement division act in a nonpartisan capacity.
> Still, Robert J. Jackson Jr., a Democratic commissioner at the SEC who is a former law professor and corporate lawyer, said the philosophy of Republican commissioners sent the wrong message. “We should be trying to deter management from committing fraud, not rewarding corporations when their lawyers cleverly mask bad deeds,” he said.