US agencies reduced a $7 billion demand against Barclays Bank to $2 billion settlement

The Trump Administration has eased enforcement of penalties on large corporations and banks, reducing fines and suspending action altogether in some cases.

The change in approach, overseen in some agencies by former corporate and banking executives, is borne out by analyses of government data and interviews with more than 60 former and current federal officials.

The Justice Department reduced a $7 billion demand on Barclays Banks, over bad mortgage investments in the 2008 financial crisis, to a settlement of $2 billion. The Royal Bank of Scotland paid a civil penalty, but escaped criminal charges. No charges have been laid against Walmart, facing a possible fine of almost $1 billion in a foreign bribery investigation.

In the first 20 months of the Trump Administration, compared with the final 20 months under President Barack Obama administration, there has been a 62% drop in penalties imposed and return of illicit profits ordered by the Securities and Exchange Commission — from $5 billion to $1.9 billion.

Corporate penalties have fallen 72% in the Justice Department’s criminal prosecutions — to $3.93 billion from $14.15 billion — and a similar decline in civil penalties against financial institutions. The SEC’s orders and Justice Department cases against banks have fallen almost 75%.

The head of the Office of the Comptroller of the Currency, a federal banking regulator, is a former executive whose bank once faced an enforcement action. The head of the Consumer Financial Protection Bureau, created by Congress during the Obama Administration, has instituted an informal freeze on new enforcement actions.

The Security and Exchange Commission’s heads of enforcement responded to the findings in The New York Times:

The article’s conclusion that enforcement of the federal securities laws has flagged rests on deeply flawed methodology. As the thorough analysis in our annual report makes clear, the division of enforcement’s performance, effectiveness and activity level during our tenure compares favorably with any period in the commission’s history.

Stephanie Avakian and Steven Peikin declared efforts to root out wrongdoing in virtual currencies. They have also pointed in speeches to action against Elon Musk, the Tesla co-founder accused of misleading investors with Twitter posts about making the company private.