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The Feds Close in on Operation Choke Point

In a move that many have anticipated for quite a while, the United States Department of Justice finally took some action to investigate Operation Choke Point. It seems this investigation/debate will also involve the Federal Deposit Insurance Corporation, so financial pundits are hopeful for some swift action. The announcement provides some sense of vindication for businesses that have been treated unfairly by this initiative put in place by the Obama administration to crack down on businesses deemed unfavorable.

U.S. Representative Blaine Luetkemeyer (R-Mo.) announced that both the DOJ and the FDIC have pledged to investigate the ill-conceived Operation Choke Point. This all comes in response to communications from more than 30 Congress members to the FDIC Acting Inspector, Fred Gipson, head of the DOJ office of Professional Responsibility, Robin Ashton and DOJ Inspector General, Michael Horowitz. According to Mr. Luetkemeyer, the investigation will help to determine if any regulations or federal laws were broken and if a senior FDIC official gave false intelligence to the U.S. Congress.

Operation Choke Point was originally set in motion to point out any illegal activities, like identity fraud and to punish the bogus companies doing these types of things. But instead of sticking with its original mission, this initiative has been targeting businesses in over 30 industries that the government has philosophical or political disagreements with. Industries, like telemarketing, dating services, gun and ammo dealers, and payday lenders have all been unfairly singled out and almost destroyed. Rather than actually identifying and taking legal action against illegal operations or companies that have committed fraud, Operation Choke Point has instead been putting big time pressure on banks to cut off financial services to small payday lenders and other legitimate businesses.

These kinds of attacks on legitimate businesses actually threaten the people that the government and its regulating bodies are sworn to provide protection for. For example, the typical payday lending customer earns about $30,000 to $50,000 a year. These folks have not been able to get financial services from traditional banks or credit unions and depend on payday lenders and other small lending companies. These people would be without desperately needed financial assistance if Operation Choke Point continues with its efforts to put small lending companies out of business. With no hope of attaining loans or other financial services from the banks in their areas, many of these underbanked people may face serious financial repercussions if Operation Choke Point continues its efforts to drive small lenders and other financial service providers out of business.

The fact of the matter is that even the FDIC’s own data proves that these folks need access to the types of services that Operation Choke Point is trying to drive out of existence. In a 2013 survey of unbanked and underbanked people, the FDIC identified nearly 25 million households were underbanked and that nearly one fourth of all households in this country used at least one alternative financial service – like title loans or payday loans – within the last year. This data proves just how vitally the underbanked people of this country need small lending companies, and how much of a financial impact the lower and middle class households of this country would feel if Operation Choke Point is allowed to continue with its unlawful efforts.

The United States is all about allowing legal, legitimate businesses to thrive, especially those that provide essential services to the underbanked people of this country. We can only hope that the Feds continue in their efforts to, hopefully, shut down Operation Choke Point for good.

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