Legal businesses still being choked by Obama-era initiative

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The news was shocking: High-ranking officials in the federal government used their power to harass lawful businesses they disliked. Their goal was nothing less than forcing these businesses to shut down. The perpetrators? According to newly-released documents: the Obama Administration’s Justice Department.

The name of the campaign was Operation Choke Point, which began as a well-intended means for government officials to investigate industries that they believed were a “high risk” for fraud or money laundering. Documents subpoenaed through Advance America et al. v. Federal Deposit Insurance Corp. et al. show that any good intentions in Choke Point were quickly choked off; instead, the politicized leadership at the Justice Department used the campaign to target industries that they personally disliked.{mosads}

Through the Federal Deposit Insurance Corporation (FDIC), officials used strong-arm tactics to pressure banks, credit lenders, and credit processing systems to stop serving industries including firearms, fireworks, porn, and small loan (or payday) lenders. For instance, according to the now-public emails, these officials directed their staffs to use “all available means” to “strongly encourage [supervised banks] to refrain from any activities that provide assistance to the business activities of [payday] lenders.”

One email from an Atlanta based FDIC regional director stated that “[a]ny banks even remotely involved in payday [lending] should be promptly brought to my attention”– regardless of whether there was any hint of wrongdoing.

Banks quickly caved to the FDIC pressure in fear of potential repercussions, and targeted industries found that access to credit and credit card processing was becoming increasingly difficult. In the case of Advance America, the plaintiff in the suit against the FDIC, they were dropped by 21 banks and rejected by 275 others. Alarmingly, emails show FDIC officials covered their tracks in an effort to build the illusion that banks were deciding to drop clients of their own accord. This resulted in many lawful businesses having to fight for their lives against a powerful and unseen foe.

You might be reading this and thinking, “good for the Justice Department – I’d never use a payday loan or shop at a gun store, anyway.” But imagine the current administration decided to arbitrarily target a favored industry of yours, based on nothing other than personal animus. If you’d be furious about that, you should be equally furious about Operation Choke Point, which set a bad precedent of using federal power to attacked industries unpopular with whatever administration occupies the White House.

People did get upset about a similar power play in 2013 when the IRS was accused of unfairly targeting Conservative-leaning organizations by putting them through extra security for their tax exemption status. Like the newest revelations about Operation Choke Point, some of the most damning information came to light only after someone sued the government in court. Sadly, Obama’s promise to run the most transparent administration in history failed on many counts.

In the case of the IRS scandal, some of the responsible parties lost their jobs (remember Lois Lerner?). But in the case of The Operation Choke Point scandal, no one did and sadly many of the perpetrators of this unfair scheme still hold regulatory power at the FDIC, and the media has largely ignored the issue.

While Operation Choke Point officially ended August 2017, some industries are still being disenfranchised. To this day, many payday lenders, gambling facilities, online pharmacies, gun stores, and others who were targeted are still reeling from having their credit lines cut or bank accounts closed.

Even today, many payment processing systems, such as PayPay, Strip, or Square, are still discriminating towards firearm industries.

If this scandal is swept under the rug and its architects unpunished, who knows what industries and companies will be attacked next. The rule of law shouldn’t depend on whether your business is a politically popular or unpopular one. If you supported Operation Choke Point, because you didn’t like guns or payday loans, you may change your tune when a future administration decides to target an industry or company you care about.

Gregory T. Angelo is the Executive Director of the Log Cabin Republicans.

Tags Federal Deposit Insurance Corporation Operation Choke Point Payday loan United States Department of Justice

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