Top House Republicans have requested that Attorney General Jeff Sessions put an end to an unfair Obama-era Justice Department program known as “Operation Choke Point.”
House Judiciary Committee Chairman Bob Goodlatte and the other GOP lawmakers said in an Aug. 10 letter that they want the department and related federal agencies to formally “repudiate” Operation Choke Point guidelines. The program attempted to discourage banks from offering financial services to “high risk” customers but was accused of unfairly going after legal businesses, including firearms dealers.
“Operation Choke Point was an Obama Administration initiative that destroyed legitimate businesses to which that Administration was ideologically opposed (e.g., firearms dealers) by intimidating financial institutions into denying banking services to those businesses,” they wrote. “The damage from this initiative lingers, and [we] request that you take immediate corrective action.”
Breitbart News learned about the secret program approximately a year after it was launched under-the-radar in 2013 by the Obama administration. “Operation Choke Point” was “designed to destroy three sectors of the private lending industry: third party payment processors (TPPPs), payday lenders, and online lenders.” The operation was headed by political operatives and career bureaucrats at the Department of Justice, the FDIC, and the new Consumer Financial Protection Bureau (CFPB).
An article in a May 2014 issue of The Washington Post revealed that the program got its name because through strangling the providers of financial services to the targeted industries, the government can “choke off” the oxygen (money) needed for these industries to survive. Without an ability to process payments, the businesses — especially online vendors — cannot survive.
The lawmakers say the program led to “abuses” by financial regulators. In keeping with President Trump’s efforts to de-regulate American businesses, the group of five House members, including Goodlatte, of Virginia; Texas Rep. Jeb Hensarling, chairman of the chamber’s Financial Services Committee; and California Rep. Darrell Issa, former chairman of the House Committee on Oversight and Government Affairs, is calling for formal policy statements from the Justice Department, the Federal Reserve Board and the Office of the Comptroller of the Currency to end such practices.
“Financial institutions should be given explicit assurance that they may serve these unfairly targeted industries just like any other legitimate businesses,” the letter states. “Institutions should also be encouraged to restore long-standing relationships with lawful, targeted industries.”
The letter also states Obama administration attorneys, over the course of six months in 2013, issued as many as 60 administrative subpoenas to banks doing business with gun-related entities including payday lenders.
In addition, the Federal Deposit Insurance Corp. and the Office of the Comptroller of the Currency flagged some of the businesses as “high-risk merchants/activities,” which hurt their ability to borrow money, the lawmakers said in the letter.
They acknowledged that the FDIC has taken some corrective measures, including a 2015 recommendation that banks “judge customer relationships on a case-by-case basis rather than declining to provide banking services to entire categories of customers.”
Although the FDIC ended its “high risk” list, the House members point out that its assertion that the industries listed are particularly high-risk was never retracted. The list included businesses such as ammunition sales, escort services, get-quick-rich schemes, on-line gambling, “racist materials” and payday loans.
The letter comes after a group of gun dealers, payday lenders, and amusement game owners who were targeted under the program testified at a House Judiciary Committee on June 22.
“They all had similar stories of longstanding banking relationships suddenly terminated without any evidence of heightened risk or wrongdoing,” the letter said. “A firearms manufacturer who had been in business over 40 years, described that he held accounts at over twenty financial institutions and within a short period of time all were terminated.”
In another example, a large New England bank denied a line of credit to a former police officer who started a gun and tactical business in Monroe, Connecticut, telling him in a voicemail message that the bank “no longer lends to firearms dealers.”
The program’s disastrous impact on the payday lending industry led the Community Financial Services Association of America, which represents some of the nation’s largest short-term lenders, to file a lawsuit against the Federal Deposit Insurance Corp. (FDIC) for its role in creating the “high-risk list” of industries to target. That list grouped categories such as “racist materials” and “credit card schemes” with “firearms” and “tobacco” sales.
The U.S. District Court for the District of Columbia ruled in July that payday lenders may move forward with their lawsuit against the FDIC and begin the discovery phase. That phase allows the plaintiffs to depose government officials under oath and examine documents and emails related to the program.
“We are thrilled by the court’s order to enter the discovery phase, as this illegal federal program has been unduly harming legal entities for years,” said Dennis Shaul, CEO of the Community Financial Services Association, in a July press release. “It is high time that the government’s unlawful and unjust crusade against lawful and licensed businesses be stopped.”
The five Republican House members asked Sessions to respond with a “plan for remedial action” by the end of August.