Payday group sues regulators over 'Choke Point'
A report on "Operation Choke Point" from the House Oversight and Government Reform Committee.
June 9, 2014 – A payday lending trade group, Community Financial Services Association of America, has sued federal banking regulators over the Justice Department’s “Operation Choke Point” program, which the group says is pressuring banks to stop serving its members.
The complaint, filed in federal court Thursday in Washington, notes federal regulators, including the Federal Reserve, FDIC and the Office of the Comptroller of the Currency, are “engaged in ‘a concerted campaign’ to drive payday lenders out of business by pressuring ‘banks and other regulated financial institutions to terminate their relationships,’ ” according to Bloomberg.
Operation Choke Point refers to the Justice Department’s initiative to investigate whether credit unions and banks allow third-party payment processors, working on behalf of payday lenders, to illegally access consumer checking accounts.
A report from the House Oversight and Government Reform Committee last month says the Justice Department’s “Operation Choke Point” program acted to pressure banks to cut off legal businesses the Obama administration considered “high risk.” The committee, chaired by Rep. Darrell Issa, R-Calif., also alleged that the department did not have “adequate legal authority” for the program.
In April, NAFCU joined with other financial services trades in issuing a joint statement on “Operation Choke Point” that was submitted to the House Financial Services Committee. The trades noted concerns that this program “could seriously deter the natural growth and development of e-commerce and stifle future economic growth.”
NAFCU continues to monitor this issue and the effects on credit unions.
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