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Operation Choke Point

blackjack50

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The Justice Department’s “Operation Choke Point” initiative has been shrouded in secrecy, but now it is starting to come to light. I first heard about the program in January through this article and since then it has been difficult to discover details about it. It is so named because through strangling the providers of financial services to the targeted industries, the government can “choke off” the oxygen (money) needed for these industries to survive. Without an ability to process payments, the businesses – especially online vendors — cannot survive.

The general outline is the DOJ and bank regulators are putting the screws to banks and other third-party payment processors to refuse banking services to companies and industries that are deemed to pose a “reputation risk” to the bank. Most controversially, the list of dubious industries is populated by enterprises that are entirely, or at least generally, legal. Tom Blumer’s extremely informative post summarizing what is known to date about Operation Choke Point reproduces the list, which includes things such as ammunition sales, escort services, get-quick-rich schemes, on-line gambling, “racist materials” and payday loans. Quite obviously, some of these things are not like the other; moreover, just because there are some bad apples within a legal industry doesn’t justify effectively destroying a legal industry through secret executive fiat.

Especially ironic, of course, is that while the DOJ and bank regulators are choking off financial services to legal industries, they are also encouraging banks to provide banking services to illegal marijuana sales.

The ability to destroy legal industries through secret actions to deprive them of banking services has obvious political consequences. For example, it was reported last week that firearms shops are alleging that Operation Choke Point is being used to pressure banks into refusing to providing financial services. There are also reports that porn stars (and here) have had their bank accounts terminated for “moral” reasons related to the “reputation risk” of banking individuals in the porn industry. IRS officials must already be salivating about ways to apply Operation Choke Point to tea party groups.

In principle, of course, the logic of Operation Choke Point could be extended to groups not currently targeted. Notably absent from the FDIC’s hit list, for example, are abortion clinics, radical environmental groups, or, well, marijuana shops, for that matter. Something similar was done to cut off credit-card payments to support the operation of WikiLeaks.

The larger legal and regulatory issue here is the expansive use of the vague and subjective standard of “reputation risk” to target these industries. In a letter to Janet Yellen, the chair of the Federal Reserve, last week, House Financial Services Committee Chairman Jeb Hensarling expressed concern over the growing use of “reputation risk” as a vehicle for attacking legal businesses. Is there any discernible principle as to why, for example, a payday lender or firearms dealer poses a “reputation risk” and an abortion provider does not?


“Operation Choke Point” - The Washington Post

This seems really unconstitutional. Has anyone heard about this? Is this really old news?
 
This seems really unconstitutional. Has anyone heard about this? Is this really old news?

It's fairly old news and yes, several retailers were impacted by it.
 
Is it still going on? Or has it been shut down?

That's a good question.

My understanding is that the FDIC "clarified" its guidelines but the DoJ is still, ultimately, the one pulling the strings.
 
Eric Holder has been shaking down and bullying Banks since the 90s.

Some things never change.
 
A former director of the FDIC wrote this op/ed on Choke Point late last year - William Isaac: Don

The Justice Department touts its Operation Choke Point as a good-faith effort to crack down on illegal businesses, weed out fraud and protect consumers. None of these claims is true.


It is becoming clear that the real goal of the program announced last year—or at the very least a desired collateral benefit—is to target entire industries deemed undesirable by putting regulatory pressure on the banks that serve them. The House Oversight and Government Reform Committee recently released evidence that “federal regulators are pressuring banks to terminate relationships with legal yet disfavored industries, without regard to the legitimacy or risk profile of individual companies.” Last week, the Federal Deposit Insurance Corp. and Justice Department announced that they will launch investigations into Operation Choke Point.
 
This is an old tactic, if the government doesnt like what youre doing it will shut down your banking services so you cant process your credit card payments and your business dries up. E-gold tried to circumvent this but was shut down as well because the government didnt want an alternative currency it couldnt control. Its what happens when you give the government too much power to regulate private business and banking.
 
It's time for everyone to remember, "First they came for the Jews and I wasn't Jewish........" I wouldn't dwell on the porn industry too much, because that's like going after smokers. However, they're also going after guns and that is a much more serious situation. So they don't actually deny you the right to buy a gun, they just make it extremely difficult for a gun shop to keep its business going.
 
This seems really unconstitutional. Has anyone heard about this? Is this really old news?

I've seen some articles about it, mostly on Fox. As to old news, I don't really think so as it is now coming to the surface. Expect it to come up more and more, especially as we head into an election year next year. It is just another underhanded scheme perpetrated by the dems during this regime. It will be decades, if ever, before we find out about the illegal and questionable crap the Obama regime has done.
 
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