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Operation Choke Point 2.0? Financial Services Discrimination Back in the News

Monday, December 9, 2024

Operation Choke Point 2.0? Financial Services Discrimination Back in the News

The plague of businesses and even individuals being exiled from the modern economy by politically motivated regulators is back in the news, thanks largely to a recent segment on the Joe Rogan Experience podcast in which a guest highlighted the ongoing scandal. Marc Andreessen, a pioneer in the web browsing industry and a current venture capitalist, shocked the hugely popular and influential podcaster by detailing how political opponents of the Biden administration were being systematically deprived of financial services. The revelations took on new significance amidst Biden’s wholesale weaponization of government for partisan ends, which has included censorship, intimidation, character assassination, and selective prosecutions, among other things. For Second Amendment advocates, it was a reminder of Biden’s long association with official corruption aimed at businesses involved with firearms and ammunition.

One of the more notorious episodes from the Obama-Biden administration was Operation Choke Point, a scheme to use pressure from federal regulators to coerce banks and payment processors from doing business with legal but politically disfavored industries. The idea was to choke off the supply of financial services the businesses needed to survive in the modern economy, while bypassing the legal scrutiny of the legislative process and official enforcement proceedings. The firearm industry was a prime target of Operation Choke Point, and many lawfully operated, otherwise financially stable businesses in that sector fell victim to its abusive, discriminatory practices.

The Obama-Biden administration first denied and then tried to whitewash the ongoing conspiracy as merely a misunderstood form of “risk management” guidance. Of course, plausible deniability was the whole point. It wasn’t the government itself directly acting on the operation’s targets, but government regulated financial service providers responding to subtle but clearly understood threats about the potential consequences of doing business with the wrong clients. These included costly and embarrassing oversight actions designed to portray the banks as lax on safeguarding their depositors against nefarious activity.

The tactic was apparently so successful in suppressing the targeted commerce that its proponents became increasingly emboldened and overt. Eventually, banking executives were hauled before congressional committees to explain themselves for servicing perfectly legal and creditworthy businesses engaged in politically disfavored activity. These included bank customers that were involved in the business of making and selling semiautomatic firearms that anti-gunners in Congress had unsuccessfully sought to ban as “assault weapons.” 

Things became so far gone that the tactics were eventually directed at the NRA itself but by New York State financial regulators who were so blatant and ham-fisted that NRA had enough evidence to challenge their actions in court. The suit charged the New York officials with violating the NRA’s first Amendment right to advocate for the constitutional liberties of its members.

The defendants unsuccessfully sought to have the suit dismissed by the trial court and then appealed to the U.S. Court of Appeals for the Second Circuit, which reversed the trial court and dismissed the case.  The NRA then appealed to the U.S. Supreme Court, where none other than the ACLU joined the suit on the NRA’s side. The high court would go on to unanimously rule in the NRA’s favor, in an opinion written by Sonia Sotomayor, considered perhaps the staunchest leftist among the nine justices (and certainly no fan of the Second Amendment). Sotomayor characterized the First Amendment principles in the case as well-established. “Today, the Court reaffirms [that] Government officials cannot attempt to coerce private parties in order to punish or suppress views that the government disfavors,” the opinion stated. 

Despite that rare and stark bipartisan rebuke against the tactics at the heart of Operation Choke Point and its sinister offspring, Andreessen claimed the Biden administration has continued and expanded these schemes. He gave several recent examples to Rogan of businesses and people who had been “de-banked,” so Andreessen asserted, “for having the wrong politics, for saying unacceptable things.” 

Andreessen also explained that regulators used the concept of a “politically exposed person” to force banks to discontinue business not just with commercial entities but even with individuals who were at odds with the administration’s own politics. As he said to Rogan, the government gets around its own constitutional constraints on punishing private persons and companies for their views by using private banks as the cutouts and hatchet men.

In this way, Andreessen said, “the government gets to say, ‘we didn’t do it; it was the private company that did it.” Banks that cooperate, Andreessen continued, additionally receive government protection from potential competitors offering innovated new financial products. He tied the recent developments back to the original Operation Choke Point, which he said targeted “guns,” among other industries disfavored by Obama and Biden. Andreessen described the regime as of one of “no due process … no rules … no court … no appeal … .” 

During his first term, President Trump officially ended the original Operation Choke Point. But the scheme’s lessons had been learned, both by corrupt government officials and by private financial service providers who either shared their politics or who were afraid of the consequences to their own livelihoods and enterprises of crossing them. Once Trump was out of office, Joe Biden again had the infrastructure at his disposal to resurrect and intensify Choke Point’s tactics. According to Mark Andreessen, that is exactly what the Biden-Harris administration did.

Fortunately, President Trump is again poised to ascend to the White House. And he has made the elimination of government waste, fraud, and abuse a top priority of his administration, including through the newly established Department of Government Efficiency (DOGE). The two principals of DOGE – Elon Musk and Vivek Ramaswamy – are themselves well-known to Joe Rogan, who seemed suitably aghast at Andreessen’s account of what the venture capitalist called Operation Choke Point 2.0. Trump himself is also aware of and opposed to the phenomenon, telling an audience at a the Bitcoin2024 conference that “as president, I will immediately shutdown Choke Point 2.0.”

Hopefully the renewed focus on this devious scheme will bring about lasting reforms and even, perhaps, accountability for those involved. 

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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.