I don't think that is correct.

"penalties or fines paid to any government agency or instrumentality because of a violation of any law are not deductible"

https://www.irs.gov/publications/p535/ch11.html

These aren't criminal violations... And actually they probably aren't penalties or fines either. I'm not a lawyer of any sort but I don't believe restitution == fines/penalties. All depends on verbiage in criminal court, IRS loopholes, and the details of the case.

"Big banks such as Bank of America and JPMorgan Chase will receive deductions against the corporate tax that will amount to between half and nearly three-quarters of their multibillion-dollar settlements, at least. Meanwhile, midsized banks and nonbank lenders generally get to deduct the whole shebang."

http://www.newsweek.com/2014/11/07/giant-penalties-are-giant...

and even expenses related to criminal violations can be deducted if they stemmed from your job

Did some digging. The amount that relates to the fine (criminal or civil) is not deductible. Settlement amounts that relate to relief may be deductible. It depends on how the various sums are described in the settlement. According to the Bloomberg article $2.39b of the $5.1b is a fine. So that piece is almost certainly, not deductible. The rest might be, but it depends on how the settlement is worded. Assuming the $2.39b is the only amount that is not deductible, that means Goldman Sachs will be able to offset about $1b in future tax liability.

Below is an article about BP. They had to pay about $20b in total, with about $5.5b being considered a fine. That $5.5b was not deductible.

http://blogs.wsj.com/moneybeat/2016/04/05/bp-can-take-tax-de...

Good point, I didn't read into the ratio of fines/restitution. Appears that half is deductible + any other expense they associate with the case/trial

One presumes that they paid taxes on $5B revenue in previous years, so there's no problem with this part.

I partially see where you are coming from... the equivalent made up story goes something like this:

I am a payroll clerk at Company A and I pay myself an extra $10,000 a month illegally for 10 years. For some crazy insane reason no criminal charges are ever brought directly against me but a civil court finds me at fault for stealing the money. I pay the $1,200,000 back to Company A and pay a fine, $1,000 to the man. I claimed that $1.2 million as income and paid taxes on it so I should get my tax money back!

The sad part is the damage they did was probably in the trillions, but this civil court couldn't realistically make them pay that back. Much of their meager slap on the wrist is tax deductible...