Regulation

Is There Still A Corporate Ulterior Motive Behind Criminal Justice Reform?

Is it just a coincidence that Donald Trump has decided to embrace criminal justice reform just at the time he is more likely to become a defendant himself? He’s not the only party that may have mixed motives in supporting the legislation that is being hyped as an outstanding expression of bipartisanship.

One of the prime movers behind the initiative has been Koch Industries, whose owners Charles and David Koch are the epitome of partisanship. Their role on this issue was initially puzzling, given that the Kochs were not known for supporting anything that was remotely progressive.

Three years ago, the full story began to emerge. The New York Times reported that one part of the reform being pushed by the Kochs and other business interests would require prosecutors to meet a more stringent standard in proving illicit intent, or “mens rea.” The Times stated that the Obama Justice Department was concerned that the change “would make it significantly harder to prosecute corporate polluters, producers of tainted food and other white-collar criminals.” PR Watch provided more detail on what the Kochs were up to.

In other words, what was made to look like a high-minded civic effort was also, at least in part, a move by corporations to shield themselves from prosecution. In the case of Koch Industries, the issue is far from a theoretical one. In Violation Tracker we document 275 cases in which the company has paid a total of $736 million for environmental, safety, employment and other offenses. One of these was a criminal case: In 2001 one of its subsidiaries pled guilty and paid $20 million to resolve allegations that it covered up Clean Air Act violations at an oil refinery in Corpus Christi, Texas.

Mens rea “reform” is not part of the current criminal justice package, but the issue is far from dead. Arkansas Sen. Tom Cotton just published an op-ed in USA Today calling for it to be added to the bill. Since Cotton’s support may be essential to passage, he may get his wish – and presumably the Kochs would be happy with that outcome.

Cotton is not the only one who has been beating this drum. Utah Sen. Orrin Hatch and Iowa Sen. Chuck Grassley have introduced mens rea legislation that would apply not only to criminal actions but also to “regulatory offenses.”

During the confirmation hearings on Brett Kavanaugh, Sen. Hatch brought up the issue of mens rea. He and the nominee both spoke enthusiastically on the need for “reform.” Here, as in much of the conservative discussion of the matter, proponents like to give the impression their concern is primarily with the rights of bank robbers and the like.

Yet it seems clear that the real intended beneficiaries are corporations and their executives supposedly being victimized by unjust regulations.

The issues surrounding criminal justice reform are complicated, but one thing is clear: it should not be used as a means of undermining the prosecution of corporate crime and misconduct.

Have Voters Killed the Crappy Coverage Comeback?

Democrats seized the House while Republicans increased their majority in the Senate, but the unambiguous and across-the-board winner in the election was regulation – specifically, regulation of the health insurance industry.

Rarely has the public sent such a clear message that it wanted government to rein in corporations and market forces in favor of consumer and public interest protections. The desire to retain provisions of the Affordable Care Act protecting those with pre-existing conditions was key to Democratic gains. Republicans responded by pretending they agreed with that principle, but few were fooled by this deception.

At the same time, voters in three deep red states – Idaho, Nebraska and Utah – approved ballot initiatives in favor of ACA Medicaid expansion. This amounted to an embrace not just of regulation but of out-and-out government-controlled health coverage.

All these results should put an end to the longstanding Republican crusade to repeal the ACA, but it remains to be seen whether there is also a termination of the Trump Administration’s effort to undermine the law through steps such as allowing wider sale of substandard policies.

One encouraging sign came even before the votes were counted. On November 2 a federal judge in Miami, acting at the request of the Federal Trade Commission, issued an order temporarily shutting down a Florida company called Simple Health Plans LLC, which along with related firms was selling policies the FTC called “predatory” and “worthless.”

The FTC complaint against the companies spells out a variety of deceptive practices meant to make customers think they were buying real coverage when in fact they were getting medical discount memberships of limited value.

It’s telling that one of the websites used by the firms is called Trumpcarequotes.com. Trumpcare is actually an appropriate term for the crappy coverage—both because Trump has been touting such plans and because the Trump name has been involved in previous scams such as Trump University. Let’s not forget that after his election Trump had to pay $25 million to settle litigation related to that venture, a step that the New York State Attorney General called “a major victory for the over 6,000 victims of his fraudulent university.”

The ACA’s provisions relating to protection for pre-existing conditions are inseparable from those setting minimum standards for coverage. Ensuring the right of patients to buy insurance is meaningless if they end up with plans that pay for next to nothing.

The proliferation of junk insurance through the efforts of companies such as Aetna was one of the dismal realities of the U.S. health insurance market that gave rise to the ACA. Republicans have been promoting similar low-cost plans as their solution to the supposed crisis of Obamacare. This is a cynical ploy to use a perverse form of consumerism to restore the old days of limited regulation. Let’s hope the election results have taught them a lesson about the consequences of messing with healthcare.

The Other Rogue Banks

The slow but steady weakening of bank regulation is continuing. Responding to legislation passed by Congress earlier this year, the Federal Reserve just voted to propose new rules for a group of banks that are large but not gigantic. Congress had called for a review of banks with assets between $100 billion and $250 billion but the Fed proposals would affect some larger ones as well. In all, 16 banks would enjoy loosened restraints.

Much of the commentary on banks focuses on mega-institutions such as Bank of America, JPMorgan Chase, Citigroup and Wells Fargo. These corporations have certainly done the most harm to the economy and whose demise would have the most dire consequences.

Yet the next tier of banks have their own track record of misconduct that argues against relaxed oversight. Some of these offenses relate directly to financial risk while others do not, but they all point to the need for more regulation rather than less. Here are examples taken from Violation Tracker.

U.S. Bancorp (total penalties in Violation Tracker: $1.2 billion): paid $453 million this year to settle Justice Department allegations that it had insufficient protections against money laundering and failed to file suspicious activity reports.

PNC Financial (total penalties: $472 million): in 2003 one of its subsidiaries paid $115 million to settle criminal charges of conspiring to violate securities laws (the deal included a deferred prosecution agreement).

Capital One (total penalties: $228 million): in 2012 one of its subsidiaries paid $165 million to settle Consumer Financial Protection Bureau (CFPB) allegations that it deployed deceptive marketing tactics in its credit card business.

Charles Schwab (total penalties: $125 million): in 2011 it paid $118 million to settle SEC allegations that it made misleading statements to clients about one of its funds.

BB&T (total penalties: $93 million): in 2016 it paid $83 million to settle Justice Department allegations it knowingly originated mortgage loans insured by the Federal Housing Administration that did not meet applicable requirements.

SunTrust (total penalties: $1.5 billion): in 2014 it settled a case brought by the CFPB, the Department of Justice, the Department of Housing and Urban Development, and attorneys general in 49 states and the District of Columbia alleging that it engaged in systemic mortgage servicing misconduct, including robo-signing and illegal foreclosure practices. The settlement required SunTrust to provide $500 million in loss-mitigation relief to underwater borrowers and pay $40 million to approximately 48,000 consumers who lost their homes to foreclosure.

American Express (total penalties: $350 million): in 2017 it paid $96 million to settle CFPB allegations of having discriminated against customers in Puerto Rico and other U.S. territories by charging higher credit card rates than in the 50 states.

Ally Financial (total penalties: $668 million): in 2012 it paid $207 million to settle Federal Reserve allegations of mortgage servicing violations.

The list goes on for the remainder of the 16 banks: Citizens Financial (total penalties: $137 million), Fifth Third Bancorp ($121 million), KeyCorp ($19 million), Regions Financial ($170 million), M&T Bank ($119 million), Huntington Bancshares ($14 million) and Discover Financial Services ($232 million).

It’s interesting that the only institution on the list with a small penalty total ($203,000) is Northern Trust, which caters to corporations and wealthy individuals rather than the general public. If all the banks similar records, then perhaps some measure of deregulation might be warranted.

Yet as long as the large banks are as ethically challenged as the giant ones, they should continue to face strict oversight.

Trump’s Law and Order Campaign Skips the Workplace

The Trump Administration has left little doubt that one of its main missions is to roll back the regulatory initiatives of the Obama years, especially the Clean Power Plan and the Consumer Financial Protection Bureau. Although Trump has been less overt about it, his corporate-friendly approach also includes weakening rules that have been around for decades.

An important case in point concerns the Fair Labor Standards Act, the key federal wage and hour law that was signed into law 80 years ago by President Franklin Roosevelt. The culmination of decades of struggle over excessive workweeks, inadequate pay levels and child labor, the FLSA put the federal government in the business of combatting wage theft and other forms of workplace exploitation.

It accomplished that through a system of workplace investigations and the imposition of financial penalties on employers large and small. In a move that has received limited attention, the Trump Labor Department is seeking to replace rigorous enforcement with a system called Payroll Audit Independent Determination (or PAID) that puts employers on the honor system. Beginning with the dubious premise that wage and hour violations mainly derive from inadvertent mistakes made by managers, PAID will encourage employers to report irregularities on their own. When they do they will still have to pay back wages but will not be assessed damages or penalties.

Such a system makes a mockery of real enforcement. What makes matters worse is that PAID, which is being billed as a pilot program for now, is being pursued right after the U.S. Supreme Court’s disastrous Epic Systems ruling. That decision affirms the right of employers to compel workers to sign mandatory arbitration agreements that would severely curtail their ability to bring collective action lawsuits. As my colleagues and I at the Corporate Research Project and Jobs With Justice Education Fund showed in a recent report, these lawsuits have allowed workers to recover billions of dollars from large corporations.

PAID was featured in a recent NBC News feature on how the Trump Administration is relaxing regulatory enforcement in numerous areas. This prompted a group of Democratic Senators to express concern about PAID to the DOL, whose spokesperson responded that it was “premature to comment” on the program.

The controversy over PAID comes amid growing concern about the prevalence of wage theft. Some of those abuses apparently exist right inside the federal government. The Labor Department, which has not yet left the investigation business, is reported to be examining the practices of a company called Seven Hills, which manages the food court at the Pentagon.

Faced with the prospect of diminished DOL enforcement and restrictions on lawsuits, activists are looking to other solutions. Some of the most encouraging work is happening at the local and state levels. For example, Centro de Trabajadores Unidos en la Lucha (Center for Workers United in Struggle) is pressing Minneapolis Mayor Jacob Frey and the City Council to pass an ordinance dealing with wage theft.

In some parts of the country, law enforcement officials are taking the term wage theft literally and treating it as a criminal offense. For example, after a joint investigation by the Washington State Attorney General’s Office and the Department of Labor & Industries, a construction company and its owner pled guilty last month to a criminal charge of first-degree theft. Earlier this month, the New York Attorney General and the Inspector General of the Port Authority announced the arrest of a contractor for failing to pay prevailing wages at a publicly-funded construction project at LaGuardia Airport.

While it would be terrible to see DOL’s wage and hour enforcement system dismantled, there are other ways rogue employers can be brought to justice.

Fake Environmental Regulation?

The Trump Administration likes to play with fire. Now it may be playing with a fire-resistant material that is also a deadly carcinogen. After years of receding as a public health threat, asbestos could make a comeback.

When Donald Trump joined his father in the New York real estate business in the late 1960s, the use of asbestos in high-rise construction was widespread. Yet within a few years it was revealed that the substance was highly dangerous for those who mined it, those who processed it and those who applied it. The hazard had actually been known for decades but had been kept secret by companies such as Johns-Manville in one of the most egregious corporate deceptions of the 20^th Century. Paul Brodeur’s 1985 book on the subject was called Outrageous Misconduct.

Asbestos producers and users were hit with tens of thousands of lawsuits, which forced Manville and other companies into bankruptcy. Use of the material was largely eliminated and vast sums were spent to remove existing asbestos from countless buildings.

Donald Trump appears to be ignorant of this history. In 2012 he tweeted his support for asbestos, claiming that if it had been more widely used in the old World Trade Center the Twin Towers would have survived the 9/11 attack. He did not mention that asbestos fibers were present in the dust clouds generated by the disaster and are believed to be among the causes of the high rate of cancer among first responders and Ground Zero workers.

In recent days there have been reports suggesting that Trump’s Environmental Protection Agency might be putting the president’s pro-asbestos sentiments into action. In early July the EPA issued what is known as a significant new use rule (or SNUR), inviting manufacturers to petition the agency to seek approval for asbestos products. An article in Fast Company sounded the alarm, stating that the EPA “has made it easier for companies to begin using asbestos again.”

The EPA is vehemently denying that is the case, insisting that it is actually strengthening asbestos regulation. An agency scientist told CNN that “the SNUR is really a good news story for public health protection.” The argument is that the rule would allow the EPA on a case-by-case basis to impose restrictions that may not currently exist. Unfortunately, it’s true that the United States, unlike many other countries, never fully banned the use of asbestos.

It is difficult to believe that the EPA, which has engaged in a deregulatory frenzy since Trump took office, will suddenly abandon its industry friends and embrace public health considerations in responding to new asbestos proposals.

One industry player, the Russian asbestos producer Uralasbest, apparently does not think so. The company, encouraged by the EPA’s reluctance to push for a total ban on the material, is decorating its shipments with a seal of approval containing Trump’s face and the statement “Approved by Donald Trump, the 45^th President of the United States.”

Corporate Impunity

In the early days of the Trump era, there was speculation that the new administration would be tough on corporate crime. Attorney General Jeff Sessions gave a speech in April 2017 in which he vowed that his Justice Department “will continue to investigate and prosecute corporate fraud and misconduct; bribery; public corruption; organized crime; trade-secret theft; money laundering; securities fraud; government fraud; health care fraud; and Internet fraud, among others.’ He added that DOJ has “a responsibility to protect American consumers.”

A new report from Public Citizen and the Corporate Research Project of Good Jobs First called Corporate Impunity shows just how hollow that promise was. Based on data from Violation Tracker, it shows that during the first year of the Trump Administration there was a substantial drop in regulatory enforcement and prosecution of corporate criminal offenses. In contrast to the zero-tolerance attitude toward migrants and refugees, the administration is showing considerable indulgence when it comes to corporate offenders.

In making a comparison to the previous administration, it is worth recalling the mixed record of the Obama years. That administration had a poor record with regard to holding top corporate executives personally responsible for serious offenses such as the abuses leading to the financial meltdown and the Deepwater Horizon oil spill disaster in the Gulf of Mexico. It continued the misguided policy of offering corporate miscreants deferred-prosecution and non-prosecution agreements.

Yet at least the Obama Administration took steps to increase the financial penalties levied on corporations for their misdeeds. For the first time, billion-dollar fines and settlements became a common occurrence.

Corporate Impunity judges the Trump Administration by that same measure—the level of monetary penalties imposed on companies. It finds, for example, that such penalties imposed by the Trump DOJ in its first year were less than one-tenth the level in each of the last two years of Obama.

The report limits its analysis of regulatory agencies to those which were headed by a Trump appointee for most of 2017. Of the 12 agencies examined, ten showed a decline in the number of enforcement actions. In some cases, those drops were steep. The Federal Trade Commission and the Securities and Exchange Commission had decreases of more than 40 percent, and five others dropped more than 25 percent.

For some agencies, the decline in the number of cases was much less severe than the drop in penalty amounts. At the Environmental Protection Agency, for example, the caseload in Trump’s first year was down 12 percent while the penalty total plunged more than 90 percent.

The results for Trump’s second year are likely to be even more dismal once results are tabulated for agencies such as the Consumer Financial Protection Bureau, which racked up an impressive record during the Obama years and attempted to do the same under Trump until the agency was captured in late 2017 by the White House and subsequently neutered.

Trump’s enforcement record shows that he really is a populist—a corporate populist creating a society in which large companies reign supreme and in many ways are above the law.

Deep Corporate Conspiracy

Donald Trump and the rightwing fringe never tire of talking about supposed deep state plots. Yet if there is any conspiracy going on, it is the seeming attempt to remove any checks on the power of large corporations.

The latest evidence of this effort can be seen at the banking regulatory agencies and the Supreme Court. Only a decade after a financial crisis brought on by the excesses of the financial sector, the agencies are moving to eliminate the Dodd-Frank restriction on speculative trading practices by the large banks. The attack on the Volcker Rule ignores not only the role such practices played in the meltdown but the fact that the banks have been doing quite well despite the limitation. Last year JPMorgan Chase, for example, posted a profit of more than $24 billion.

Yet even more infuriating is seeing the Supreme Court justice nominated by a purported populist president cast the deciding vote and write the opinion in a ruling that will cripple the ability of workers to use the courts to address abusive employment practices.

The opinion by Justice Gorsuch in the Epic Systems case turns the clock back to a time of near total employer tyranny in the workplace by allowing corporations to mandate that disputes be resolved through the secretive and one-sided process of arbitration rather than class action lawsuits.

The ruling had a special significance for me, given that I have spent the past year doing extensive research about such lawsuits; specifically, wage and hour collective actions designed to combat off-the-clock work, denial of overtime compensation and other forms of wage theft. My colleagues and I will publish a report on the research next week, so I cannot provide the details now. Suffice it to say that the report is going to show that wage theft is a lot more pervasive in big business than is commonly understood.

When I began the research I thought I was documenting legal actions that would continue to be a key tool for addressing employment abuses. Now it may turn out that the report will be mainly of historical interest, describing the way large corporations used to be compelled to pay out substantial sums to compensate workers cheated out of their proper pay.

To make matters worse, the Supreme Court is expected to land another blow against the collective power of workers in its forthcoming ruling in the Janus case concerning public employee unions.

The weakening of regulation, class action litigation and unions provides an unprecedented boost in the ability of big business to call the shots in the workplace and in communities. The massive increase in profitability generated by the Republican tax bill makes large corporations even more mighty.

While this power grab is taking place, many corporations are trying to present themselves as part of the more enlightened sector of society. Walt Disney and Starbucks, for instance, want us to believe they are the anti-racist vanguard. This doesn’t always work: Wells Fargo, Volkswagen and Facebook face an uphill battle. Yet all too many firms have succeeded in projecting a benign image while engaging in corrupt behavior.

There is no easy way to remedy this situation, but we should not let the distractions emanating from the White House make us forget the larger problems.

Profits Before Safety

The passengers who survived Southwest Flight 1380’s engine explosion are feeling lucky to be alive and grateful for the skilled landing executed by pilot Tammie Jo Shults. Another group feeling relief are the top executives of Allegiant Air. If the accident had happened to one of their planes, the carrier’s survival might be in question.

That’s because of the revelations contained in a remarkable 60 Minutes investigative report on Allegiant that aired on April 15^th. Correspondent Steve Kroft described the culture of the budget carrier as one that puts profits before safety and that discourages pilots from reporting mechanical problems with their aircraft. The piece documented an alarming pattern of aborted takeoffs, cabin pressure loss, emergency descents and unscheduled landings during Allegiant flights.

In one incident Allegiant, whose executives refused to be interviewed by 60 Minutes, fired a pilot who made an emergency landing when smoke appeared in the cabin and then ordered passengers to exit rapidly through escape chutes once the plane was on the ground.

To its credit, 60 Minutes did not focus only on Allegiant. It also investigated why a carrier with such a checkered track record was still allowed to fly. The answer turned out to be that the Federal Aviation Administration has during the past few years adopted a less confrontational enforcement approach.

Kroft grilled John Duncan, the FAA’s head of flight standards, who went through extraordinary verbal contortions to avoid saying anything negative about Allegiant’s record. Duncan insisted that each incident was addressed separately and refused to acknowledge there was any pattern of misconduct. Duncan is a living embodiment of that new FAA approach, which involves quietly cooperating with carriers to fix problems rather than pressuring them with large fines and other public sanctions.

The FAA has not abandoned monetary penalties entirely. In Violation Tracker, Allegiant has eight entries from the agency, the largest being a $175,000 fine from 2015 for drug testing deficiencies. Penalties like that are fine for routine infractions, but something a lot more punitive is needed when a company has the kind of dismal record attributed to Allegiant.

Higher fines are just part of what is needed at the FAA. The agency should return to an adversarial posture and compel rogue carriers such as Allegiant to take safety issues seriously.

It won’t be easy for the FAA to change its course, since the Trump Administration and Congressional Republicans are on a crusade against just about every kind of regulation. The latest maneuver is the use of the Congressional Review Act, an obscure law employed last year to undo rules adopted by the Obama Administration during the prior 12 months, to eliminate a longer-standing one: the 2013 Consumer Financial Protection Bureau regulation barring auto lenders from charging minority customers higher interest rates.

This obsession with dismantling the so-called administrative state has gone beyond all justification and is putting the population more and more at the mercy of unscrupulous companies.

A Nirvana for Rogue Corporations

The SEC’s enforcement action against Theranos Inc. and its founder Elizabeth Holmes puts a new focus on the persistence of corporate crime in the healthcare sector after a period in which the business culprits getting the most attention were banks such as Wells Fargo and automotive companies such as Volkswagen and Takata.

Another reminder of the checkered history of health companies comes in a new report from Public Citizen on the trend in legal penalties imposed on pharmaceutical firms. The study, an update of three previous analyses on the subject done by the group, documents a disturbing trend: Although there is no reason to think that egregious drug company misbehavior has disappeared, aggregate criminal penalties against those firms have plunged.

Public Citizen finds that criminal penalties in 2016-2017 were just $317 million, down 88 percent from four years earlier. Combined federal criminal and civil penalties over the same period of time declined from $8.7 billion to $2.8 billion, a drop of more than two-thirds.

At the heart of this trend, the report finds, is a falloff in penalties from settlements of cases involving the unlawful promotion of prescription drugs. Those penalties are down by 94 percent from their peak in 2012-2013.

It is probably true that Big Pharma has toned down the brazen behavior that led to giant penalties such as the $3 billion imposed on GlaxoSmithKline, the $2.3 billion imposed on Pfizer, the $2.2 billion imposed on Johnson & Johnson, the $1.5 billion imposed on Abbott Laboratories, the $1.4 billion imposed on Eli Lilly, the $950 million imposed on Merck, etc.

One problem that has by no means disappeared is the improper distribution of opioids. Although Purdue Pharma was penalized $461 million in 2007 and various wholesalers and pharmacy chains have been hit with smaller fines since then, there is no indication that the misconduct is receding.

Part of the problem is that the president of the United States has directed little criticism against the drug industry while making inflammatory statements about illicit traffickers, including the suggestion of imposing the death penalty. He has also expressed his admiration for the extra-judicial executions of drug dealers in the Philippines.

The decline in drug industry fines is part of a larger tendency by the Trump Administration to scale back penalties against corporations in all industries. As I previously noted, the latest update to Violation Tracker through the end of Trump’s first 12 months shows a remarkable drop in penalties, especially for the very largest companies in the Fortune 100.

This can be seen as a form of stealth deregulation. Increasingly, Big Pharma and other industries benefit both from rolled-back rulemaking and from diminished financial consequences if they break the rules still on the books. It is truly a nirvana for rogue corporations.

The Other Problem Banks

Bipartisanship has returned to Washington, thanks to the overwhelming desire of Republicans and quite a few Democrats to roll back portions of the Dodd-Frank Act. Ten years after the onset of the financial meltdown and seven years after the law went into effect, the relentless efforts of the banking lobby seem to be paying off.

The legislation, S.2155, is being sold as much needed relief for smaller banks that were supposedly treated unfairly by Dodd-Frank. Some adjustment to the law might make sense for very small banks, but the bill has evolved into something that will benefit larger institutions that still merit close scrutiny.

Using relief for community banks as a stalking horse, proponents of the bill have added provisions that will reduce the degree of supervision that would be exercised on banks with assets up to $250 billion. Those with assets between $50 billion and $100 billion would benefit the most.

The two dozen banks (listed in a Congressional Research Service report) that would be affected by these provisions are hardly mom and pop financial institutions. And while the most harm to the economy was done by the likes of Bank of America, Citigroup, JPMorgan Chase and Wells Fargo, these mid-sized banks have records that are far from spotless.

Take the case of Credit Suisse, the Swiss bank whose U.S. operation has assets of about $215 billion. During the final days of the Obama Administration it had to pay $5.3 billion to settle a case involving the sale of toxic securities a decade ago. In 2014 it paid $1.8 billion in connection with criminal charges of helping U.S. taxpayers file false returns. In 2009 it paid $268 million to settle criminal allegations relating to economic sanctions. In all, Credit Suisse has more than $9 billion documented in Violation Tracker, ranking it tenth among all corporations.

Or consider Barclays, the British bank whose U.S. operation has assets of about $180 billion. In 2015 it pled guilty to criminal charges of conspiring to manipulate foreign exchange markets and was fined $710 million while also paying $400 million to settle related civil allegations. That same year it had to pay $325 million to settle a case brought by the National Credit Union Administration concerning Barclay’s sale of toxic securities a decade earlier. Its Violation Tracker total is more than $3 billion, putting it in nineteenth place among all corporations.

Other controversial foreign banks whose U.S. subsidiaries would benefit from S.2155 relaxed regulation include Deutsche Bank ($12 billion in Violation Tracker), BNP Paribas ($9 billion) and UBS ($5 billion).

Foreign banks are not the only bad actors on the list. Atlanta-based SunTrust, with about $200 billion in assets, has racked up more than $1.5 billion in penalties, including one case in which it had to provide $500 million in relief to underwater borrowers to resolve allegations that it engaged in deceptive and illegal mortgage servicing practices. Among the other items in its rap sheet is a $21 million payment to resolve allegations that it charged higher loan rates to black and Latino borrowers.

The S.2155 beneficiary list includes half a dozen additional domestic banks with $100 million or more in penalties: Ally Financial, American Express, Discover Financial Services, Fifth Third Bancorp, M&T Bank Corporation, and Regions Financial Corporation.

A bank does not have to be gigantic to be problematic. These culprits should not lumped together with community banks in deciding whether to tinker with Dodd-Frank.