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November 20, 2014
Luetkemeyer bill would counter 'Choke Point'
Rep. Blaine Luetkemeyer, R-Mo., introduced legislation that would rein in the Justice Department's "Operation Choke Point" initiative by restricting its ability to order the termination of accounts in financial institutions, including credit unions.
The "Financial Institution Customer Protection Act," H.R. 5758, would require federal banking regulators, including NCUA, to provide material reason beyond reputational risk for ordering a financial institutions to terminate a banking relationship. It would also require regulators to put any order to terminate a customer's account into writing.
"This legislation is straightforward by stating that federal banking agencies must put in writing any suggestion to terminate a customer's banking account and by requiring agencies to define terms by which they regularly use in the examination process, and by returning the powers vested in FIRREA [the Financial Institutions Reform, Recovery, and Enforcement Act] to their original purpose," Luetkemeyer said in a statement.
The Operation Choke Point initiative 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.
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 its effects on credit unions.
The "Financial Institution Customer Protection Act," H.R. 5758, would require federal banking regulators, including NCUA, to provide material reason beyond reputational risk for ordering a financial institutions to terminate a banking relationship. It would also require regulators to put any order to terminate a customer's account into writing.
"This legislation is straightforward by stating that federal banking agencies must put in writing any suggestion to terminate a customer's banking account and by requiring agencies to define terms by which they regularly use in the examination process, and by returning the powers vested in FIRREA [the Financial Institutions Reform, Recovery, and Enforcement Act] to their original purpose," Luetkemeyer said in a statement.
The Operation Choke Point initiative 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.
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 its effects on credit unions.
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