Operation Chokepoint Strangled by Justice Department

August 21, 2017 at 8:31 am Leave a comment

Operation Chokepoint, the initiative of the Obama Justice Department to clamp down on payday lenders and firearm distributors by discouraging banks and credit unions from providing financial services to them, was officially declared dead by the Trump administration on Friday.

To its critics, Operation Chokepoint was an overly aggressive use of regulatory and legal power by the Obama administration to harass legitimate businesses with which they disagreed. Although supporters of the initiative claimed that the Justice Department’s efforts were exaggerated, the FDIC felt the need in 2015 to encourage banks to continue to take a “risk based approach based on the attributes of individual customers rather than declining to provide banking services to entire categories of customers.”

In a strongly worded letter released on Friday, the Department stressed that it would “not discourage the provision of financial services to lawful industries, including businesses engaged in short-term lending and firearms-related activities.”

Regardless of which side of the ideological spectrum you find yourself on, the push back against Operation Chokepoint was both appropriate and necessary. No bank or credit union should be used as a means for pressuring legitimate businesses to stop dealing with customers that governments don’t like.

On that note, go get your eclipse-watching protective gear ready to go. Unless I’m blinded by the light, I’ll be back tomorrow.

 

Entry filed under: General, Legal Watch, Regulatory. Tags: .

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Authored By:

Henry Meier, Esq., Senior Vice President, General Counsel, New York Credit Union Association.

The views Henry expresses are Henry’s alone and do not necessarily reflect the views of the Association. In addition, although Henry strives to give his readers useful and accurate information on a broad range of subjects, many of which involve legal disputes, his views are not a substitute for legal advise from retained counsel.

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