Explore The NRA Universe Of Websites

APPEARS IN News

FDIC Backpedals on Operation Choke Point as Victims Fight Back

Friday, August 1, 2014

This week, the Federal Deposit Insurance Corporation (FDIC) released a new Financial Institution Letter purportedly aimed at “clarifying its supervisory approach to institutions establishing account relationships with third-party payment processors (TPPPs).” As we have reported, FDIC is among a number of federal agencies involved in Operation Choke Point, an enforcement program that claims to target financial fraud, but that many say is being used to choke off banking services to legitimate, although politically-disfavored, businesses. 

Another FDIC Financial Institution Letter from 2011 included a list of so-called “high risk” merchant categories for which banks servicing TPPPs were instructed to be on alert. The risky activities, according to FDIC, included firearm and ammunition sales.  The regulators, of course, could not plausibly portray firearm or ammunition sales as inherently fraudulent in the same manner as other activities on the list (such as Ponzi schemes).  Nevertheless, they claimed the activities posed “reputational risk” to the banks because some people consider them personally or politically objectionable.

According to a report by the House Oversight and Government Reform Committee, the Department of Justice (DOJ) then launched Operation Choke Point to increase regulatory scrutiny of banks doing business with merchants on the list. The banks, fearing compliance costs and bad publicity that could arise from DOJ investigations, in turn began denying or severing business relationships with customers in the listed industries. As a result, a number of firearm-related businesses lost or were denied access to credit, without regard to their individual creditworthiness or financial performance.

FDIC’s latest moves seek to walk back its portrayal of the listed merchant categories as inherently risky to banks. Indeed, FDIC has revised the online version of its guidance materials to remove the list. Monday’s Financial Institution Letter also states:

[T]he lists of examples of merchant categories have led to misunderstandings regarding the FDIC’s supervisory approach to institutions’ relationships with TPPPs, resulting in the misperception that the listed examples of merchant categories were prohibited or discouraged. The FDIC encourages insured depository institutions to serve their communities and recognizes the importance of services they provide. In fact, it is the FDIC’s policy that insured institutions that properly manage customer relationships are neither prohibited nor discouraged from providing services to customers operating in compliance with applicable federal and state law. Accordingly, as part of clarifying our guidance, the FDIC is removing the lists of examples of merchant categories from outstanding guidance and the article.

FDIC, in other words, is trying to portray the matter as a miscommunication and is suggesting that banks were overreacting to its “guidance” by severing relationships with customers that were in the listed categories. Needless to say, FDIC is not accepting responsibility for creating what many say became the target list for Operation Choke Point, much less acknowledging the businesses were deliberately being forced out of the market for banking services. Indeed, FDIC’s statement seems to blame the list on the TPPPs themselves: “The original documents contained lists of examples of telemarketing or Internet merchant categories that had been associated by the payments industry with higher-risk activity” (emphasis added).

On the other hand, FDIC’s rescission of the list and its acknowledgement that, at the very least, the list conveyed the wrong message are welcome developments. 

Whether that settles the matter of Operation Choke Point, however, is far from clear.

Brian Wise, who helped create the U.S. Consumer Coalition to shed light on the abuses of Operation Choke Point, remained skeptical in comments to the Washington Times:

While we support the FDIC’s decision to remove the list of ‘high-risk merchants’ from the FDIC website, damage has already been done to countless businesses across the country who have already lost their bank accounts. … Whether the list is published on the FDIC’s website or not, we expect banks will still be fearful of doing business with these lawful industries.

Others are pursuing legal remedies to deal with the excesses of Operation Choke Point, including an appropriations rider, litigation, and pending legislation. Congress is also continuing its investigation into the matter, most recently with hearings conducted by the House Judiciary Committee and the House Financial Services Committee.

Clearly, the pressure is on the Obama administration with regard to Operation Choke Point, and while the president might hope the FDIC’s latest action would make that scrutiny disappear, any such hope would probably constitute wishful thinking at this point.

Indeed, The Blaze is now reporting on allegations that tactics like those used in Operation Choke Point may have been employed against specific political groups, including Pueblo Freedom and Rights, the grassroots organization that led last year’s historic recall of anti-gun Colorado Senator Angela Giron.

Given all this, and who knows what details of Operation Choke Point that may yet emerge, the FDIC’s recent attempts to cover its tracks may be a case of too little, too late.

TRENDING NOW
California Using Tax Dollars to Racially Profile Gun Owners

News  

Monday, August 15, 2022

California Using Tax Dollars to Racially Profile Gun Owners

California gun owners have been under siege for the past year - even by the not-so-Golden State’s standards. In September 2021, Governor Gavin Newsom (D) signed AB-173, which allows for the disclosure of highly sensitive ...

Canada’s Liberals Bypass Parliament to Further Gun Control Agenda

News  

Monday, August 15, 2022

Canada’s Liberals Bypass Parliament to Further Gun Control Agenda

Earlier this year, Prime Minister Justin Trudeau’s government introduced Bill C-21, proposing a permanent freeze on the sale, transfer and import of handguns in Canada. The bill remains at the initial stages and did not pass prior to ...

California: Appropriations Committees Pass Anti-Gun Bills to Floor

Friday, August 12, 2022

California: Appropriations Committees Pass Anti-Gun Bills to Floor

Yesterday, the Appropriations Committees of both chambers considered bills previously placed on the suspense file. SB 505, which would have required gun owners to carry insurance and held them strictly civilly liable, was held in committee, while the ...

Guide To The Interstate Transportation Of Firearms

Gun Laws  

Thursday, January 1, 2015

Guide To The Interstate Transportation Of Firearms

CAUTION: Federal and state firearms laws are subject to frequent change. This summary is not to be considered as legal advice or a restatement of law.

Supreme Court Signals It May Rein In Federal Rulemakers

News  

Monday, August 8, 2022

Supreme Court Signals It May Rein In Federal Rulemakers

While most of the attention from the end of the United States Supreme Court’s last term focused on several landmark cases, including a major win for gun owners in the NRA-supported case New York State Rifle ...

Oregon: Faulty Gun Control Ballot Measure Summary Approved

Friday, August 12, 2022

Oregon: Faulty Gun Control Ballot Measure Summary Approved

This week, the Explanatory Statement Committee approved Ballot Measure 114’s (formerly IP 17) summary that will appear in the voter pamphlet.

Another Good Guy with a Gun Stops the Bad Guy

News  

Monday, July 25, 2022

Another Good Guy with a Gun Stops the Bad Guy

On July 19, 22-year-old Elisjsha Dicken was shopping with his girlfriend at the Greenwood Park Mall in Greenwood, Ind. when a gunman armed with a rifle opened fire in the food court. Upon witnessing the ...

When Seconds Count, the Police are Only Hours Away

News  

Monday, August 8, 2022

When Seconds Count, the Police are Only Hours Away

After violent unrest and looting in 2020 that Chicago mayor Lori Lightfoot admitted had “spread like wildfire” throughout parts of Chicago, the mayor nonetheless “urged Chicagoans not to take matters into their own hands in this concealed ...

Illinois: Naperville Considering Banning Many Firearm & Magazine Sales

Monday, July 18, 2022

Illinois: Naperville Considering Banning Many Firearm & Magazine Sales

Tomorrow, at 7:00 P.M., the Naperville City Council will consider File 22-0848, to ban commercial sales of many commonly-owned firearms and standard capacity magazines. NRA Members and Second Amendment supporters are invited to ask the Council ...

NRA Achieves Historical Milestone as 25 States Recognize Constitutional Carry

News  

Friday, April 1, 2022

NRA Achieves Historical Milestone as 25 States Recognize Constitutional Carry

Half the country will now enjoy the freedom to carry a handgun for self-defense without a permit from the state thanks to the tireless efforts of men and women of the National Rifle Association. 

MORE TRENDING +
LESS TRENDING -

More Like This From Around The NRA

NRA ILA

Established in 1975, the Institute for Legislative Action (ILA) is the "lobbying" arm of the National Rifle Association of America. ILA is responsible for preserving the right of all law-abiding individuals in the legislative, political, and legal arenas, to purchase, possess and use firearms for legitimate purposes as guaranteed by the Second Amendment to the U.S. Constitution.