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House Committee Chairmen Call on Government to Formally ‘Repudiate’ Operation Choke Point

The chairmen of the House Financial Services Committee and the House Judiciary Committee as well as three subcommittee chairmen sent a letter today to three federal regulators asking them to issue “clear and formal” policies against Operation Choke Point.

The letter was sent to the Federal Reserve Board, the Office of the Comptroller of the Currency, and the Attorney General of the United States.

Operation Choke Point was an initiative that sought to have certain types of entities which were at a higher risk for money laundering and other illegal activities, cut off from access to banks and legitimate financial institutions. Unfortunately, many legitimate organizations, including collection agencies, were caught up in the initiative and lost access to banks, payment processors, and other types of financial services.

Accordingly, we request that your respective Departments and agencies issue clear and public formal policy statements repudiating Operation Choke Point and the abuses by financial regulators of the “reputation risk” guidance they developed and promulgated under Operation Choke Point’s auspices. Financial institutions should be given explicit assurance that they may serve these unfairly targeted industries just like any other legitimate businesses. Institutions should also be encouraged to restore long-standing relationships with lawful, targeted industries. Finally, the regulatory agencies should be directed to implement procedures to insure that field­level examiners adhere to this policy, including, if appropriate, by barring the use of “moral suasion” to pressure banks not to serve certain categories of customers.

A full copy of the letter is available here.

Operation Choke Point was put into action in November 2012. The Federal Deposit Insurance Corp. issued a letter in early 2015 that advised its regulated financial institutions to take a risk-based approach to evaluating relationships with businesses rather than “declining to provide banking services to entire categories of customers.” However, according to the letter: “while the FDIC rescinded its “High-Risk Merchant” list, it has never (a) rescinded its general guidance about reputation risks posed by bank customers, or (b) retracted its assertion that the industries it had listed are particularly high-risk. We are concerned and informed that banks have continued to refuse to serve law-abiding members of lawful industries on account of their purported poor reputations.”

The House Judiciary Committee convened a roundtable discussion in June with victims of Operation Choke Point, primarily firearms dealers.

 

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