House panel split on Operation Choke Point
House Financial Services Subcommittee on Oversight and Investigations Chairman Patrick McHenry, R-N.C., led Tuesday's hearing on Operation Choke Point.
July 16, 2014 – During a House subcommittee hearing Tuesday on the Justice Department’s Operation Choke Point initiative, government agency officials said they are not forcing financial institutions to cut off accounts for riskier businesses but are warning them of the entities’ possible fraudulent activities.
Subcommittee members were divided largely along party lines in their expressed views of the program.
The hearing, held by the House Financial Services Subcommittee on Oversight and Investigations, included witnesses from the Justice Department, Federal Reserve Board, FDIC and Office of the Comptroller of the Currency. The hearing reviewed the Operation Choke Point initiative, which was launched in an effort to fight consumer fraud by denying fraudulent businesses access to banking services and holding financial institutions and third-party processors accountable if they continue to serve a client operating in a fraudulent manner.
Subcommittee Chairman Patrick McHenry, R-N.C., accused witnesses of circulating a “government hit list” of legal businesses they deem to be “high-risk” to target. Reps. Stephen Fincher, R-Tenn., and Sean Duffy, R-Wis., were also skeptical of the initiative.
Democrats, meanwhile, were generally supportive of the program, with the panel’s ranking member, Rep. Maxine Waters, D-Calif., declaring the hearing to be a complete waste of time. She thanked the agencies for doing their job and urged them to be as aggressive as they can possibly be.
Justice Department Assistant Attorney General Stuart Delery defended the initiative and said investigations are based on evidence that consumers are being defrauded and the program is not in place to target whole industries or businesses that act lawfully. FDIC and other federal agency witnesses gave similar testimony.
The House Judiciary Subcommittee on Regulatory Reform, Commercial and Antitrust Law will also hold a hearing on the legal authority of the initiative on Thursday.