Regulation

Reputation Be Damned

Federal bank regulators are normally concerned with getting financial institutions to reduce their risk level, but the Trump Administration has a different idea. The major agencies—the Federal Reserve, Federal Deposit Insurance Corporation, and the Office of the Comptroller of the Currency—jointly announced they have revised key guidance documents to remove references to what is known as reputation risk.

This is the latest in a series of moves by the bank examiners to discourage banks from taking steps to limit potential harm to their business stemming from an association with controversial activities. More specifically, it is part of an effort pushed by Trump to ban what he and his supporters in Congress claim is a widespread practice of debanking.

The controversy stems in large part from reported steps taken by several major banks to dissociate themselves from Trump and his family businesses in the immediate wake of the January 6 insurrection. At that time, outrage about the siege of the Capitol was high, and the Trump name was toxic. It thus made sense that banks, along with other institutions, would want to sever their ties.

Trump is obsessed with rewriting the history of January 6, and part of that is to delegitimize actions such as those taken by the banks. It has now become part of MAGA doctrine that banks acted out of unjustified political discrimination.

This claim has been broadened beyond Trump to include supposed prejudice against other individuals and companies for ideological reasons. Based on this dubious premise, the bank regulators have been moving to obliterate the idea that financial institutions should be judged on potential risks to their reputation.

Reputation risk is far from a contrived issue. All of the major commercial and investment banks have severely compromised reputations. Some of this stems from their own misconduct, but numerous institutions have compounded the problem by doing business with disreputable parties.

For example, in 2014 JPMorgan Chase paid $1.7 billion to the Justice Department to settle criminal and civil charges stemming from its business dealings with fraudster Bernard Madoff. In 2020 the New York State Department of Financial Services fined Deutsche Bank $150 million for failing to properly monitor account activity conducted on behalf of sexual predator Jeffrey Epstein.

There are many more instances of banks being penalized in connection with suspicious activities by customers that were likely signs of money laundering. For instance, in 2024 TD Bank pleaded guilty to criminal charges of anti-money-laundering deficiencies and paid a penalty of $1.9 billion to the DOJ.

Major banks have also been penalized for doing business with parties that may be violating economic sanctions. In 2023 Wells Fargo paid $30 million to settle allegations by the Office of Foreign Assets Control that it provided a foreign bank located in Europe with software that the bank then used to process trade finance transactions with U.S.-sanctioned jurisdictions and persons.

In short, there are numerous ways in which financial institutions can damage their reputation by doing business with disreputable parties. At a time when banks should be more careful about the parties with whom they do business, the Trump regulatory agencies are pushing them in the opposite direction.

By removing reputation risk as one of the factors used in evaluating bank performance, the administration is making it more likely banks will abandon prudence in the pursuit of higher profits. As financial history shows, at some point this will not end well.

Slush Fund Time Bomb

Among the many unorthodox features of the slush fund being created by the Justice Department is the fact that the beneficiaries are limited to the supposed victims of the Biden Administration. Nothing is being said about compensating those who have been unjustly treated during the Trump years.

Calls for such payments will undoubtedly arise once Trump is out of office, given the egregious way his administration has prosecuted individuals against whom the president has political grudges. There will also be calls for redress for the corporations that have been targeted.

The Trump Administration’s posture toward the corporate sector is complicated. In many respects, it has adopted a conventional pro-business anti-regulatory agenda, taking it even further than previous Republican presidents dared to do. Agencies such as the EPA are taking a meat cleaver to long-established environmental rules, while the entire Consumer Financial Protection Bureau has been effectively dismantled. Trump and his family have developed close and ethically questionable ties to businesses such as cryptocurrency, profiting from light federal oversight.

At the same time, the Trump Administration has taken aggressive action against selected corporations, using regulatory powers in unprecedented ways. Here are a few examples.

False Claims Act. The Justice Department has taken a 150-year-old law widely used to prosecute contractors which cheat the federal government and turned it into a weapon in the Trump Administration’s war on diversity, equity, and inclusion in the workplace. In April, IBM agreed to pay $17 million to settle a lawsuit brought by the DOJ alleging that the company’s DEI hiring program amounted to a form of racial discrimination that supposedly harmed white candidates.

Broadcast licenses. Federal Communications Commission chair Brendan Carr, a MAGA zealot, has made implicit threats to revoke the licenses of corporations such as Disney Entertainment, owner of the ABC Network, as another prong of the anti-DEI campaign. It is also widely believed he was using the technique to bolster Trump’s pressure on ABC to fire the outspoken late-night TV host Jimmy Kimmel.

Merger Approvals and Antitrust. Last year, the FCC used its power over certain mergers to pressure Verizon and T-Mobile to disown their DEI practices in order to clear the way for several acquisitions. The Federal Trade Commission has also gotten involved in diversity issues. Earlier this year, chairman Andrew Ferguson sent a letter to dozens of major law firms, warning that DEI hiring policies could be construed as anti-competitive.

Reverse Discrimination. The anti-DEI fervor has spread to the very agency that is supposed to enforce workplace civil rights laws, the Equal Employment Opportunity Commission. Chair Andrea Lucas has made it her mission to carry out Trump’s executive orders designed to undermine DEI. Earlier this month, the agency filed suit against the New York Times, accusing it of violating federal law by passing over a white male employee for promotion.

All these actions amount to misuse or distortion of government powers. Aside from the harms done to individual companies, these practices help to undermine the legitimacy of the entire regulatory system. Complaints about Trump’s politicization of certain rules will be exploited by those who seek to challenge oversight of business more broadly.

Claims brought under a future anti-weaponization fund will exacerbate the problem. Corporations will not only resist legitimate regulation but will also seek compensation. Regulators will then become more timid and businesses more brazen.

Ultimately, the current slush fund and future iterations will come to serve not as checks on government abuses but instead as restraints on the ability of government to protect the public.

Who Will Regulate the Prediction Markets?

A controversial new form of financial activity is on the rise, and a federal regulatory agency is aggressively asserting its oversight role. That sounds good, except for the fact that the head of the agency is a strong booster of the activity and seems mainly concerned with undercutting more aggressive state-level regulation.

Prediction markets run by companies such as Kalshi and Polymarket have exploded in popularity among people looking to bet not only on sports but just about anything else under the sun. Unfortunately, that includes things such as military actions, and there is growing evidence suggesting that government employees are among those placing the wagers and are collecting substantial winnings through illicit means.

Recently, a U.S. Army Master Sargeant was charged with using classified information to place successful bets on Polymarket about the timing of the U.S. military operation to capture Nicolas Maduro in Venezuela. We are likely to see more cases targeting this new form of insider trading.

The Justice Department is responsible for bringing federal criminal cases, but it is unclear which agency has responsibility to regulate the prediction services. The Commodity Futures Trading Commission is claiming that power for itself.

Congress created the CFTC in 1974 for the purpose of regulating futures contracts, which had long been used to trade agricultural commodities and later spread to a variety of financial instruments known as derivatives, which include options and swaps whose value derives from an underlying asset. The CFTC’s current mission statement says its role is “to promote the integrity, resilience, and vibrancy of the U.S. derivatives markets through sound regulation.”

Prediction bets have no connection to commodities of any kind and thus do not seem to qualify as derivatives. That has not stopped the CFTC, which for the past five months has been run by Michael Selig, who was nominated by Trump after working at a corporate law firm representing cryptocurrency industry clients.

Under Selig, the CFTC has sought to muscle out state governments, some of which have taken the sensible position that prediction markets are really a form of gambling and thus should be overseen by state agencies that regulate casinos, horse racing, and lotteries. Selig is fighting against what the CFTC calls “state encroachment” by filing lawsuits against Arizona, Connecticut, Illinois, Minnesota, New York, and Wisconsin. The agency recently submitted an amicus brief supporting Kalshi in a dispute with regulators in Ohio.

These disputes over jurisdiction are more than a turf war. The CFTC seems to want to assert its authority so that it can exert a mild form of regulation on the prediction markets. In fact, the agency is putting more emphasis on leniency across its activities.

The CFTC has just issued an advisory document indicating it plans to depend more on voluntary self-reporting of misconduct, which suggests that investigations will take a back seat. It is difficult to believe that aggressive new companies such as Kalshi and Polymarket are going to be quick to report wrongdoing.

When parties do self-report, the CFTC is offering generous rewards, including big reductions in fines and the possibility of a declination, an arrangement in which the agency does not file charges against the cooperating company.

It appears that the CFTC has already been scaling back enforcement. Since Selig took office, the agency has announced only a handful of penalty actions, and those cases appear to have been initiated before he arrived—and before the second Trump Administration began.

We are only beginning to recognize the perils posed by the new prediction services. Letting a regulatory agency that is not interested in robust enforcement oversee this activity is not the way to guard against those dangers.

Today’s Queen of Hearts

During her interview with Donald Trump, Norah O’Donnell of 60 Minutes mentioned that the man accused of trying to assassinate him had attended a No Kings rally. Trump responded: “I’m not a king…If I was a king I wouldn’t be dealing with you.”

Trump’s kingliness, especially in contrast to a real monarch such as Charles, is open to debate. But it is hard to ignore Trump’s similarity to a different royal figure, namely the Queen of Hearts. Like that foul-tempered character from Alice in Wonderland, Trump lashes out at those who displease him, calling for punishments that echo the Queen’s famous command: “Off with their heads.”

While the Queen never succeeds in getting anyone decapitated, Trump, unfortunately, has filled his administration with lackies who are eager to satisfy his whims. These days, that seems to be the main function the Justice Department, whose acting head, Todd Blanche, just succeeded in getting a North Carolina grand jury to indict former FBI director James Comey for a social media posting of seashells that supposedly constituted a death threat against the president.

That case is unlikely to go anywhere. More serious is the announcement by the Federal Communications Commission chair, led by MAGA zealot Brendan Carr, that it intends to review the TV station licenses held by ABC. The unusual step is purportedly connected to the agency’s review of ABC’s diversity practices.

It is likely no coincidence that this move comes just as Trump and the First Lady are demanding that ABC fire late night host Jimmy Kimmel for making a joke that Kimmel says was a reference to the age difference between POTUS and FLOTUS but which the Trumps insist was a call for assassination.

A move by the FCC to threaten a license holder to silence a Trump critic is just as pernicious as doing so to punish a company for having sought to promote diversity. The first is an egregious violation of the First Amendment. It appeared that Carr had learned that lesson after he caused an uproar by making a similar threat against ABC for a comment Kimmel had made about the man accused of assassinating rightwing activist Charlie Kirk.

Carr’s crusade against DEI flies in the face of the FCC’s long history of policies to combat discrimination and promote diversity in the communications industry.

Those policies came about primarily through the efforts of non-profit groups with close ties to the civil rights movement. Chief among these was the Office of Communications of the United Church of Christ, now known as the UCC Media Justice Ministry. In the 1960s, the UCC effort, led by Dr. Everett C. Parker, began to research the way in which television and radio stations in the South covered the campaigns for racial justice.

The UCC found that stations such as WLBT-TV in Jackson, Mississippi mostly ignored the protests while frequently airing pejorative comments about African-Americans. The UCC petitioned the FCC to deny the station a license renewal because it was not serving the public interest, as broadcasters were required to do under federal law. After a lengthy legal battle, the UCC won a landmark court ruling.

Around the same time, the UCC successfully pressured the FCC to adopt equal employment regulations for license holders. Those rules were modified by a 1998 court ruling, but the agency continued not only to prohibit discrimination but also require broadcasters to take positive steps to promote the hiring and promotion of minorities and women. Operations with larger staffs were expected to engage in more initiatives than smaller ones.

The current FCC’s policies turn this tradition upside down. By embracing the wrong-headed idea that efforts to address discrimination are themselves discriminatory, the agency is starting to turn back the clock to a time when people of color were largely absent from the staffs of media companies.

It remains to be seen whether the “off with their heads” pronouncements of the Trump Administration are any more successful than those of the Queen of Hearts.

Taking Pride in Doing Less

Regulatory agencies used to brag about how much enforcement they did. After all, that is their job. Under Trump 2.0 agencies such as the EPA and the Justice Department’s Criminal Division Fraud Section have continued this practice, even when it meant greatly exaggerating what they had actually accomplished.

Now the Securities and Exchange Commission is taking a very different tack: It just issued a press release boasting about cutting back on its enforcement. The motivation is ideological: the current SEC leadership wants to be less aggressive in its oversight of the financial industry.

In typical Trumpian manner, the release begins with a swipe at the previous Administration, which is accused of having used the SEC “to pursue media headlines and run up numbers,” creating “misguided expectations on what constitutes effective enforcement.”

SEC Chairman Paul S. Atkins is quoted as saying: “Over the past year, the Commission has put a stop to regulation by enforcement and recentered its enforcement program on the Commission’s core mission by prioritizing cases that provide meaningful investor protection and strengthen market integrity.”

The phrase “regulation by enforcement” seems to be meant as a critique of the prior leadership’s attempt to exercise oversight over newer sectors such as cryptocurrency, which is favored under Trump 2.0, due in no small part to the fact that the President’s family business is heavily involved in the business.

Atkins’s claim to be focusing on serious fraud cases has yet to become evident in the SEC’s announcements of case resolutions. According to data collected for Violation Tracker, total penalties collected by the agency during the first 12 months of Trump 2.0 were $298 million, down from $1.6 billion during Biden’s final year. The average penalty sank from $25 million to $5 million.

This year the SEC has announced only half a dozen resolved cases against companies with a penalty of $1 million or more.

A sign of things to come can be seen in the appointment of a new director of the SEC’s Division of Enforcement. David Woodcock had been a partner in the corporate law firm of Gibson, Dunn & Crutcher and before that was a senior staff attorney at Exxon Mobil.

Meanwhile, another easing of financial regulation was announced by the Treasury Department’s Financial Crimes Enforcement Network. FinCEN is proposing a rule that would give banks much more responsibility to assess their own exposure to illicit activity such as money laundering.

This approach is justified in the usual anti-regulatory rhetoric. Treasury Secretary Scott Bessent is quoted as saying: “Our proposal restores common sense with a focus on keeping bad actors out of the financial system, not burying America’s banks in more red tape.” Not surprisingly, banks are thrilled with the proposal.

FinCEN and the SEC are trying to give the impression they are making enforcement more effective by focusing on the more serious cases. What is more likely is that there will be less enforcement of cases of all kinds and financial miscreants will enjoy greater impunity.

Crackdown or Anomaly?

The Trump Administration leaves no doubt where it stands on street crime and drug trafficking: it supports the harshest punishments for perpetrators. When it comes to corporate crime, the stance has generally been quite different. Trump has used his pardon power to benefit a slew of convicted businesspeople, and the Justice Department is finding new ways to offer leniency to corporate defendants.

The past two months, however, have seen a burst of case resolutions in which corporations are paying fines and settlements of $100 million or more, which could be called mega-penalties. These have included cases in areas such as environmental protection for which the Trump Administration has not usually engaged in aggressive enforcement.

For example, in a case brought by the Environmental Protection Agency and the Justice Department, a federal court in Michigan ordered utility DTE Energy to pay a $100 million penalty for Clean Air Act violations at its coke battery in River Rouge.

PacifiCorp, owned by Berkshire Hathaway, agreed to pay $575 million to resolve U.S. government claims relating to wildfires in Oregon and Washington. The government argued that the company’s electrical lines negligently started all six fires.

Walmart agreed to pay $100 million to settle a case brought by the Federal Trade Commission and a group of states alleging that the retailer caused delivery drivers to lose tens of millions of dollars’ worth of earnings, by deceiving them about the base pay, incentive pay and tips they could earn.

Aetna, owned by CVS Health, agreed to pay $117 million to resolve DOJ allegations that it violated the False Claims Act by submitting or failing to withdraw inaccurate and untruthful diagnosis codes for its Medicare Advantage Plan enrollees in order to increase its payments from Medicare.

Adobe Systems agreed to pay $150 million, including a $75 million penalty and $75 million in free services to customers, in a case brought by the Justice Department alleging that the company’s subscription practices violated the Restore Online Shoppers’ Confidence Act by failing to clearly disclose important subscription information and provide subscribers with simple ways to cancel.

The Department of Commerce’s Bureau of Industry and Security (BIS) announced that Applied Materials Inc. would pay a $252 million penalty for illegal exports of U.S. semiconductor manufacturing equipment to China.

If the Trump Administration maintains this pace, it will end up with 36 mega-penalties for the year, nearly twice the number announced during the first year of Trump 2.0, according to the data collected for Violation Tracker.

That figure would give the administration a mega-penalty annual tally comparable to that of the past two Democratic presidencies. Biden’s annual total averaged 36.5 and Obama’s average was 43. For Trump 1.0 the figure was 32.

It remains to be seen whether the spate of mega-penalties of the past two months is an indication that enforcement is ramping up or is just an anomaly. In any event, it is encouraging to see that at least some federal regulators and Justice Department prosecutors are taking their job seriously.

The New Senator from the Fortune 500

Parts of MAGA world are up in arms over the decision by Oklahoma Gov. Kevin Stitt to name Alan Armstrong to fill the Senate seat vacated by Markwayne Mullin, Trump’s new Secretary of Homeland Security. The fact that Armstrong made a political donation to Adam Kinzinger, who voted to impeach Trump while in Congress, is viewed as evidence he is insufficiently loyal to the president.

What these MAGA zealots don’t seem to care about is the fact that Armstrong spent more than a decade running a Fortune 500 energy company with a checkered regulatory record. Williams Companies, whose core business is natural gas processing and transportation, has annual revenues of about $12 billion and nearly $3 billion in profits. Armstrong received $18 million in compensation from the company last year.

As shown in Violation Tracker, Williams has paid out over $160 million in fines and settlements stemming from 120 regulatory infractions and class action lawsuits since 2000. This period closely coincides with Armstrong’s career as a top executive of the company.

Antitrust cases account for the largest portion of the penalty total, $61 million. In 2023, for example, Williams and several affiliates agreed to pay $12 million to Wisconsin natural gas buyers to settle a class action suit alleging the company was part of a price-fixing conspiracy in the early 2000s. In 2019 Williams agreed to pay $4.5 million to settle its role in litigation involving a conspiracy to raise the price of natural gas in Missouri and Kansas.

Environmental violations account for the most cases, 88 of the 120, with total penalties of $25 million. The largest of these in dollar terms is a 2023 case involving Clean Air Act violations caused by excessive emissions of volatile organic compounds, methane, and other pollutants at 15 natural gas processing plants. Williams and related entities agreed to spend an estimated $8.5 million to reduce emissions, and Williams paid a civil penalty of $3.75 million.

Williams has also been fined two dozen times for safety-related infractions, including 13 cases brought by OSHA. One of these involved the death of a worker at a facility in Wyoming.

Back in 2005, Williams paid $55 million to settle a lawsuit alleging it mismanaged an employee pension plan.

Armstrong is unlikely to accomplish much during his nine months in office, but he has made it clear his priorities will be to serve the interests of the industry to which he devoted his career. As the Washington Post put it: “Armstrong said his goal during his short stint in the Senate will be to drive ‘better policies that allow us to take advantage of our natural resources around the country,’ particularly through the passage of permitting reform legislation to speed up energy projects.”

Whether Armstrong turns out to be a total MAGA loyalist remains to be seen, but there is little doubt he will use his office to advance the pro-corporate agenda at the core of Trump’s policies.

Environmental Gaslighting

Under Trump 2.0, the Environmental Protection Agency has gone after the nation’s pollution rules the way a hyena devours a gazelle. EPA Administrator Lee Zeldin proudly depicted the abandonment of the finding that climate change endangers human health as “the single largest deregulatory action in the history of the United States.”

The agency has also moved to weaken limits on mercury releases from coal-burning power plants, rolled back vehicle emission standards, and eased restrictions on ethylene oxide, a cancer-causing gas used to sterilize medical devices. And much more.

Amid this environmental demolition derby, it was a shock to see a recent press release from the EPA touting that in fiscal year 2025 the agency produced its “strongest enforcement and compliance results in years.” Among what it presents as “highlights from President Trump’s first year back in office” is the claim that the EPA concluded over 2,300 civil enforcement cases, which is said to be “over 400 more than the final year of the Biden Administration and more than the last nine fiscal years.”

The first thing to point out is that nearly one-third of fiscal year 2025, which began in October 2024, occurred while Biden was still in office. Second, it is unclear whether the reference to concluded cases included those in which no penalties were imposed.

According to data collected for Violation Tracker, the EPA announced 727 civil penalty cases during FY 2025, which is far less than the 2,300 figure, and more than one-quarter of those occurred while Biden was still in office. The penalty total for the fiscal year was about $1.1 billion, a fraction of the $6 billion the EPA claims it collected in “commitments to return facilities to compliance.”

During the first 12 months of Trump 2.0, the EPA announced 586 civil penalty cases, well below the total of 889 cases during the final 12 months of Biden. The Trump cases entailed $722 million in penalties, which is vastly below the $3.2 billion total for the Biden cases during that period.

It is no surprise that an agency overseen by Donald Trump would grossly exaggerate its accomplishments. The question is why it is choosing to inflate those accomplishments that run contrary to its larger mission of weakening the country’s environmental safety net while promoting fossil fuels and sabotaging wind and solar energy.

In issuing that press release, the EPA may in effect be acknowledging that there is still a large portion of the public that cares about clean air and water and wants to control toxic substances. The agency seems to be betting that it can persuade those people it is still doing its traditional job even as it hacks away at the underpinnings of that mission.

For the time being, environmental enforcement is not defunct. But neither is it thriving in the way the EPA wants us to believe. As more and more regulations are weakened or eliminated, the amount of enforcement will continue to decline, as will the health of the country.

A Neutered Financial Watchdog

Since its creation nearly a century ago, the Securities and Exchange Commission has been one of the country’s premier regulatory agencies, protecting investors from misconduct by large corporations and other players in financial markets.

In the early 2000s the SEC investigated accounting fraud by the likes of Enron and Worldcom. In the aftermath of the 2008 financial crisis, it brought major enforcement actions against Wall Street banks for packaging and selling toxic securities. It has brought thousands of other cases against perpetrators of market manipulation, insider trading, and foreign bribery.

You wouldn’t know this by looking at the recent track record of the agency. Under Trump 2.0 this once fierce regulator is a shadow of its former self. The watchdog has lost its bite.

The enfeeblement of the SEC is highlighted in a new report from Cornerstone Research focusing on the agency’s accounting and auditing enforcement actions. It finds that the number of such cases initiated by the SEC in 2025 dropped 68 percent from the year before and reached the lowest number since 2017.

At the same time, the total monetary settlements collected by the agency in accounting and auditing cases dropped to just $31 million, a plunge from the $907 million figure in 2024. Some 98 percent of the 2025 amount was collected during the final few weeks of the Biden Administration, meaning that under Trump 2.0 the penalties have been next to nothing.

The picture is slightly less dismal in the data collected for Violation Tracker covering SEC cases of all kinds against companies. It shows that total penalties during the first 12 months of Trump 2.0 were $298 million, down from $1.6 billion during Biden’s final year. The average penalty sank from $25 million to $5 million.

One reason for the drop is a shift in the typical defendant. Biden’s SEC brought more cases against big investment banks and other larger corporations, while under Trump the resolved matters are more likely to involve small-time players.

Even more worrying is the SEC decision to largely abandon enforcement actions against certain categories of companies, especially those involved in cryptocurrency. After Trump did an about-face on crypto, the SEC withdrew dozens of lawsuits involving that sector. That included major investigations of companies such as Coinbase and Binance. All this, of course, occurred as the Trump family itself invested heavily in crypto and got a boost from the founder of Binance.

The SEC also seems to be abandoning its role with regard to the Foreign Corrupt Practices Act. Under Trump 2.0 the agency has not resolved a single foreign bribery case. During Biden’s final year, five such cases were completed, including one in which the weapons producer RTX Corporation (formerly known as Raytheon Technologies) paid $124 million to settle a civil case involving improper payments made to assist in obtaining contracts with the Qatari military.

Both at home and abroad, corruption is being given a freer rein by the SEC and the rest of the Trump Administration.

Turning Regulators into the Anti-DEI Police

During the first year of Trump 2.0, most federal regulatory agencies have experienced savage budget cuts, deep staffing reductions, and abandonment of their core mission. The Consumer Financial Protection Bureau, teetering on the edge of extinction, was subjected to the indignity of having its investigators ordered to abide by a “humility pledge” requiring them to take a less aggressive stance toward corporate miscreants.

One of the few exceptions to this disempowerment has been seen at the portion of the Justice Department charged with enforcing the False Claims Act, the federal law most commonly used in prosecuting fraud by government contractors. While the volume of enforcement activity at most federal agencies has plummeted, there has been a steady stream of announcements of resolved FCA cases. As shown in Violation Tracker, the DOJ has imposed $1.8 billion in penalties since Inauguration Day in about 200 actions, many involving fraud by healthcare providers.

Now, however, it appears that DOJ is moving in a different direction. There have been recent press reports saying that Justice is beginning to apply the FCA in an unusual and troubling manner.

Investigations are said to be underway in which major contractors which adopted diversity initiatives in their hiring and promotion are considered to have cheated the federal government. This is based on Trump’s dubious claim that DEI is illegal and his obsession with stamping out all remnants of it in both the public and the private sectors.

The Wall Street Journal reported that Google and Verizon are among the companies that have received DOJ demands for documents and information about their workplace programs. Other targeted companies were said to be industries ranging from automotive and pharmaceuticals to defense and utilities.

The Journal pointed out that false-claims investigations are usually begun when a whistleblower alerts the DOJ to contractor fraud. By contrast, these new anti-DEI probes are being initiated by political appointees—in other words, MAGA apparatchiks.

DOJ is not the only federal agency warping its mission to satisfy anti-DEI objectives. The Washington Post is reporting that the Equal Employment Opportunity Commission, which has a proud history of combatting employer discrimination against women and people of color, is now soliciting complaints from white men who believe they are the victims of unfair treatment related to diversity initiatives.

This comes as the agency has drastically cut back the number of conventional lawsuits involving allegations of discrimination based on race and national origin.

Earlier, the Federal Communications Commission used its power over media mergers to pressure companies to abandon their DEI policies. Companies such as T-Mobile quickly complied.

What is next? Will the Department of Agriculture prosecute farmers for employing crop diversification on their land?

It is bad enough when the Trump Administration adheres to the usual Republican playbook of deregulation and feeble enforcement. It is worse when agencies act aggressively but do so in a way that betrays their mission. The conversion of regulatory agencies into the anti-DEI police undermines their legitimate enforcement role while stoking feelings of white victimhood that are so corrosive to our society.