As much as we all enjoy the rich heritage of the United States, we know that there have been times when government-sponsored initiatives have gotten a bit out of control. There are many examples of this concept that we can all recall if we try hard enough. It is usually best to know about these situations and then to learn lessons that we can implement moving forward. With forward progress in mind, it is to the relief of many people that the House has passed a bill to bring a much-maligned government initiative to an end once and for all.
U.S. Representative Blaine Luetkemeyer recently announced that the House has passed a bill he introduced that will put an official stop to Operation Choke Point. This initiative has been getting a lot of press over the past year, and most of it has not been positive. Operation Choke Point provided momentum to allow regulators to put pressure on banks. This pressure was intended to stop the banks from providing crucial financial services to some industries that certain officials deemed “unseemly.” Industries, like the payday lending industry, ammo suppliers and cash checking locations have suffered a lot because of Operation Choke Point. It is without doubt that some business owners even had to close up shop due to this initiative.
Both banks and business owners may be breathing a sigh of relief with the news of Luetkemeyer’s bill getting official approval. In an official statement Mr. Luetkemeyer said:
“After years of remaining steadfast in bringing an end to Operation Choke Point, I am proud that the majority of my colleagues today joined me in casting their votes to ensure this program is brought to a halt and that greater transparency is achieved. Over the past couple of years I have introduced legislation, held meetings with and sent letters to Department of Justice (DOJ) and federal banking regulatory officials, and most of all, relentlessly strove to help those who have been negatively impacted by this illegal initiative. Together, the first step has been taken to ensure that federal banking agencies and DOJ can no longer intimidate financial institutions from offering financial services to licensed, legally-operating businesses that have been targeted not because of potential wrongdoing, but because of personal and political motivation.”
According to the Financial Institution Customer Protection Act, agencies such as the Federal Deposit Insurance Corporation and the Office of the Comptroller of the Currency, along with many others, cannot make requests or orders for financial providers to stop their banking relationships with clients, unless regulators have viable reasons for them to do so. All orders and requests for accounts to be terminated would require written proof and would be contingent on additional data, other than simply accusations of reputational risk being suffered. Additionally, this legislation eliminates the word “affecting” from the Financial Institutions Reform, Recovery and Enforcement Act (aka FIRREA) and replaces the word with “against” or “by.” This is to make sure that the Department of Justice limits their historically broad interpretations and allows the original intent of the statute to be put into practice.
It has been a long time coming, but it looks like there is somewhat of a light at the end of the tunnel for businesses that have been adversely affected by Operation Choke Point. Of course, it is well known that the CFPB still has many of the aforementioned industries squarely in its crosshairs, and that the bureau has new regulations that it plans to put into action that will be enforced in the near future.