The House passed legislation on Thursday to limit regulators’ ability to request shutting off bank accounts associated with businesses suspected of fraud.
Passed largely along party lines by a vote of 250-169, the bill would prevent banking regulators from requesting or ordering banks to close specific customer accounts unless the reason isn’t based solely on reputation. Circumstances involving threats to national security would also qualify.
Only 10 Democrats joined with Republicans to support the measure after House Minority Leader Nancy Pelosi (D-Calif.) urged lawmakers in a “Dear Colleague” letter Wednesday night to oppose it.
The legislation would effectively stall "Operation Choke Point," a Justice Department initiative announced in 2013 that has sought to “choke” businesses suspected of committing consumer fraud by hindering their access to the financial system.
Republicans argued the proposal would ensure due process for businesses and prevent bias against entities merely considered to have risk based on their reputation.
“The federal government should not be able to intimidate financial institutions into dropping entire sectors of the economy as customers based not on wrongdoing, but purely on personal and political motivations and without due process,” said Rep. Blaine Luetkemeyer (R-Mo.), the bill’s author.
The Obama administration issued a veto threat against the bill, saying that a new written material requirement would impede regulators’ ability to enforce financial laws.
“Restricting the federal banking agencies in this way could unnecessarily and dangerously hinder or compromise important law enforcement and national security efforts,” the White House said in a statement of administration policy.