Republicans Call on DOJ to End Obama-Era Operation Choke Point that Targeted Gun Dealers

House Republicans are calling on Attorney General Jeff Sessions to put an end to the Obama-era Operation Choke Point, which targeted many businesses, but particularly gun dealers.

The program sought to cripple businesses by closing off their ability to gain credit for their businesses.

Fox News reports:

House Judiciary Committee Chairman Bob Goodlatte and the other GOP lawmakers said in an Aug. 10 letter that they want the department and related federal agencies to formally “repudiate” Operation Choke Point guidelines. The program attempted to discourage banks from offering financial services to “high risk” customers but was accused of unfairly going after legal businesses including firearms dealers.

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“Operation Choke Point was an Obama Administration initiative that destroyed legitimate businesses to which that Administration was ideologically opposed (e.g., firearms dealers) by intimidating financial institutions into denying banking services to those businesses,” they wrote. “The damage from this initiative lingers, and [we] request that you take immediate corrective action.”

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The lawmakers say the roughly six-year-old program led to “abuses” by financial regulators. They are calling for formal policy statements from the Justice Department, the Federal Reserve Board and the Office of the Comptroller of the Currency to end such practices.

“Financial institutions should be given explicit assurance that they may serve these unfairly targeted industries just like any other legitimate businesses,” the letter states. “Institutions should also be encouraged to restore long-standing relationships with lawful, targeted industries.”

The letter was signed by five House members including Goodlatte, of Virginia; Texas Rep. Jeb Hensarling, chairman of the chamber’s Financial Services Committee; and California Rep. Darrell Issa, former chairman of the House Committee on Oversight and Government Affairs.

Keep in mind that this program was put in place by criminal Attorney General Eric Holder, who was  found to be in contempt of Congress after failing to provide subpoenaed documents in the Fast and Furious scandal, which his department was involved in trafficking thousands of guns across the US/Mexico border that resulted in the deaths of hundreds of Mexicans and at least two federal agents.

The DOJ targeted several businesses besides gun stores.

Those businesses include pornography distributors and actresses, sellers of drug paraphernalia and dating services.

According to a 2011 Federal Deposit Insurance Corporation bulletin, which lists “merchant categories that have been associated with high-risk activity” involving “disreputable merchants,” it appears that the DOJ was attempting to malign legal gun stores, as well as other businesses.

These businesses were labeled “Ponzi schemes,” “get rich products” and “high risk” activities.

“Although many clients of payment processors are reputable merchants, an increasing number are not and should be considered ‘high risk,'” the DOJ’s bulletin on Operation Choke Point read. “These disreputable merchants use payment processors to charge consumers for questionable or fraudulent goods and services.”

Jason Oxman, the CEO of the Electronic Transactions Association, which represents more than 500 payments and technology companies, wrote at The Hill about operation Chokepoint:

The “chokepoint” in this operation is the nation’s payments infrastructure, the means by which merchants process nearly $5 trillion in consumer purchases in the U.S. each year. 

Federal law enforcers are targeting merchant categories like payday lenders, ammunition and tobacco sales, and telemarketers – but not merely by pursuing those merchants directly. 

Rather, Operation Chokepoint is flooding payments companies that provide processing service to those industries with subpoenas, civil investigative demands, and other burdensome and costly legal demands.

The theory behind this enforcement program has superficial logic: increase the legal and compliance costs of serving certain disfavored merchant categories, and payments companies will simply stop providing service to such merchants. 

And it’s working – payments companies across the country are cutting off service to categories of merchants that – although providing a legal service – are creating the potential for significant financial and reputational harm as law enforcement publicizes its activities.  

Thus far, payday lenders have been the most frequent target. 

Whatever the merits of payday lending – and there are valid arguments on both sides –it is legal in 36 states. 

And if payday lenders are today’s target– what category will be next and who makes that decision?

Many merchants had terrible stories, including going out of business and losing their relationship with their bank.

“They all had similar stories of longstanding banking relationships suddenly terminated without any evidence of heightened risk or wrongdoing,” the letter said. “A firearms manufacturer who had been in business over 40 years, described that he held accounts at over twenty financial institutions and within a short period of time all were terminated.”

The letter comes after a House Judiciary Committee meeting in which several people who were targeted under the program met with representative to tell their stories.


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