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Members of Congress Ask Inspectors General of DOJ, FDIC to Investigate Operation Chokepoint

Friday, October 24, 2014

Coalitions of congressional representatives have issued letters over the past two Thursdays requesting internal investigators at the Department of Justice (DOJ) and Federal Deposit Insurance Corporation (FDIC) to examine Operation Choke Point (OPC) and any officials and staff involved in the program.

The effort, led by Rep. Blaine Luetkemeyer  (R-Mo.), characterizes Operation Choke Point as “a DOJ-initiated effort that aims to force businesses, many of which are licensed and legally-operating, out of the financial service space and therefore, out of business.” Its targets include firearm and ammunition manufacturers and retailers.

Referencing the findings of a report by the House Oversight and Government Reform Committee (which we reported on here), the letters charge DOJ with an “egregious abuse of power.”  Specifically, they claim that the agency has exceeded its mandate and authority under the Financial Institutions Reform, Recovery, and Enforcement Act of 1989 (FIRREA), the claimed basis for OPC. “There is no doubt in our minds,” the letters state, that FDIC and DOJ officials “have abused their authority” to advance personal and political agendas.

The first letter was sent on October 16 to Michael Horowitz, DOJ Inspector General, and Robin Ashton, counsel for DOJ’s Office of Professional Responsibility. It details evidence that DOJ officials, despite representations to Congress that OPC was focused on combating consumer fraud, knew the program was “forcing legally-operating businesses out of the financial services space.” The letter even quotes one DOJ lawyer as referring to this outcome as a “collateral benefit” of the program. It also refers to DOJ documents obtained by Congress that indicate senior staff had informed the attorney general himself that OPC was having a detrimental impact on legitimate businesses and causing banks to drop entire lines of business.

The second letter, sent on Thursday to FDIC acting inspector general Fred W. Givens , suggests that FDIC’s involvement in the operation conflicts with its “primary mission” to “protect the safety and soundness of our nation’s financial institutions.”  This is because the operation forces “legitimate customers from banks, causing not only damage to those customers but also driving revenue from the banks themselves.”

The letter goes on to detail FDIC’s “troubling” connection to OPC through a list of “high risk merchants and activities” that the chief of FDIC’s Division of Risk Management Supervision claimed in a presentation to the Federal Financial Institutions Examination Council warranted “heightened scrutiny.” Such merchant categories included those engaged in firearm and ammunition sales. The letter recounts that FDIC provided no explanation to congressional investigators for the bases on which the businesses were listed or why illegal activities, such as Ponzi Schemes, were listed alongside legitimate businesses such as firearm sales and coin dealing. “It is beyond worrisome,” the letter states, “that DOJ’s radical interpretation and application of FIRREA … has been coordinated through and reinforced by FDIC staff.”

Thursday’s letter additionally explains how testimony provided by FDIC general counsel Richard J. Osterman at a July hearing of the House Financial Services Committee conflicted with correspondence from an FDIC regional director. Contrary to Osterman’s statements at the hearing insisting that the FDIC was not pressuring banks to sever relationships with disfavored types of merchants, the regional director’s correspondence stated that FDIC condemns relationships with specific industries. Additional evidence obtained by congressional investigators, according to Thursday’s letter, “clearly indicates that specific industries are targeted by Operation Choke Point” with “the assistance of FDIC examiners and senior officials.” The letter therefore concludes that “Congress has received false testimony from a senior FDIC official.”

Both letters ask the officials to whom they are addressed to keep Congress informed of their investigative efforts, to the extent possible. They also state that if the signatories do not hear from the investigators by November 12, 2014, they expect to meet with them in person to “directly express [their] concerns.”

The October letters are merely the latest attempts by members of Congress to shed light on and curb the abuses of Operation Choke Point.  The NRA heartily supports these efforts and thanks the Rep. Luetkemeyer and his fellow signatories for pressing for answers on yet another scandal that continues to taint DOJ, even as attorney general Eric Holder prepares to exit his post.

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