Congressional lawmakers are calling on banking regulators to fire government employees who participated in a U.S. Department of Justice program that used banking regulations to force businesses in disfavored industries, such as adult entertainment or firearm sales, to stop doing business.
In hearings before the House Financial Services subcommittee, Rep. Sean Duffy (R-WI) called on Federal Deposit Insurance Corporation (FDIC) Chairman Martin Gruenberg to fire employees who participated in the government program known as “Operation Choke Point.”
‘Disfavored Lines of Business’
Heritage Foundation Senior Legal Fellow Alden Abbott says Operation Chokepoint was used to target specific industries disfavored by the Obama administration.
“Where we are right now with Operation Chokepoint is that the FDIC officials have admitted in testimony that bad judgment was shown in issuing this list in 2011 to two banks of disfavored lines of business [that] could occasion audits,” Abbott said.
The Truth Is Out There
Abbott says government officials are probably hiding the full story behind Operation Choke Point.
“The [Obama] administration claims not to have any lists of particular lines of business that will occasion auditing by the FDIC bank examiners or likely [lead to] audits,” Abbott said. “The very fact that this is out there, and the administration hasn’t … formally made a strong statement [to the contrary], means that there [are] still … some lingering risks. … By that, I mean, people know what was on the 2011 list.”
Abbott says Congress should continue to demand resignations at FDIC and make other significant reforms within the banking agency.
“You want to have the resignation and dismissal of all the officials found to be complicit, and new leadership at the FDIC,” Abbott said. “I’d like to see a public commitment by the new leader of the FDIC that he or she would make it a priority to prevent any discrimination against particular lines of commerce. You do need personnel changes in several different departments.”
‘This Isn’t Pursuing Fraud’
U.S. Consumer Coalition Senior Advisor Brian Wise says Choke Point is an end run around Congress’ lawmaking authority.
“There’s a role for some of these agencies to play in pursuing fraud, but this isn’t pursuing fraud,” Wise said. “They are going after law-abiding citizens in industries they’ve been trying to destroy for decades. Eric Holder himself said that his biggest regret was not being able to stop people from buying guns. Yet his biggest legacy will be Operation Chokepoint, which stops people from being able to buy guns, so the irony is that his biggest regret may still come to pass.”
Strong-arm Tactics
Wise says Choke Point is reminiscent of criminal organizations’ tactics.
“Very simply, this is exactly how the Mafia used to operate,” Wise said. “It was, ‘Look, we can’t force you to do something, but we can sure make life difficult for you if you don’t,’ and if people don’t comply, that’s when you see enforcement action against them. It’s very difficult to fight the federal government when they have an enforcement action against you.
“In the course of their regular examination procedure, these guys go in and they say, ‘Look, we can’t tell you not to do business with these industries, but if you do, we will be sure to audit every single transaction that comes through your bank,'” Wise said.
Wise says the federal government’s efforts to “choke” disfavored but legal industries are un-American.
“It’s really sad,” Wise said. “It’s not the America I grew up in, and it’s not the America I was raised to love. It’s not America. That’s what everyone needs to start understanding. [These are] tactics that are used in countries that we try and bring democracy to.”
Jeff Reynolds ([email protected]) writes from Portland, Oregon.
Internet Info:
Alden Abbott, “‘Choking Off’ Disfavored Businesses and Their Clients: How Operation Choke Point Undermines the Rule of Law and Harms the Economy,” The Heritage Foundation, https://heartland.org/policy-documents/choking-disfavored-businesses-and-their-clients-how-operation-choke-point-undermine/
