Report: 'Choke Point' hurt legal businesses
June 2, 2014 – A report from the House Oversight and Government Reform Committee says the Justice Department’s “Operation Choke Point” program acted to pressure banks to cut off legal businesses the Obama administration considered “high risk.”
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.
“The ostensible goal of the investigation is to combat mass-market consumer fraud by foreclosing fraudsters’ access to payment systems,” the committee’s release said. “However, today’s report finds the true goal of Operation Choke Point is to target industries deemed objectionable by the Administration … to ‘choke out’ companies the Administration considers a ‘high risk’ or otherwise objectionable, despite the fact that they are legal businesses. The goal of the initiative is to deny these merchants access to the banking and payments networks that every business needs to survive.”
The committee, chaired by Rep. Darrell Issa, R-Calif., also alleged that the department did not have “adequate legal authority” for the program.
Last month, 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.
House committee release
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