Court Documents Reveal Continuance of Operation Choke Point: U.S. Rep. Blaine Luetkemeyer Responds

The Missouri congressman issued letters to the FDIC and OCC calling for an investigation after payday lenders are reportedly cut off from banking services.

10/15/2018 2:00 PM

Court Documents Reveal Continuance of Operation Choke Point: U.S. Rep. Blaine Luetkemeyer Responds

U.S. Rep. Blaine Luetkemeyer, R-Mo., is calling for an investigation from Federal Deposit Insurance Corporation (FDIC) Chairman Jelena McWilliams and Comptroller of the Currency Joseph Otting after new details reveal actions restricting banking services for legitimate business under an Obama-era initiative known as Operation Choke Point.

Operation Choke Point was a program in which the FDIC and U.S. Department of Justice (DOJ) reportedly applied pressure to financial institutions in order to cut off financial services to certain licensed, legally operating industries, including debt collection.

In April 2015, ACA International’s Board of Directors unanimously voted to support legislation and policy changes that would bring an end to Operation Choke Point. ACA members have also reported that banking relationships have continued to be unfairly terminated in certain instances despite the DOJ’s commitment to end the program.

“As a result, we believe Congress must continue to investigate practices of unfair banking terminations and act to ensure that rogue examiners and certain regulators cannot pick and choose winners and losers in the marketplace, and base decisions on their own ideology,” ACA International CEO Mark Neeb said.

Meanwhile, Luetkemeyer's letters released today reference a case in the U.S. District Court for the District of Columbia involving access to banking for payday lenders.

“Last Friday, newly-unsealed documents linking Federal Deposit Insurance Corporation (FDIC) staff and Operation Choke Point were released as part of a motion for summary judgment in the case of Advance America et. al. v. Federal Deposit Insurance Corporation,” Luetkemeyer wrote in the Oct. 15 letter to McWilliams. “While I have long understood the connection between FDIC staff and this abusive initiative, this new information gives more insight into deeply disturbing trends within your agency. The evidence proves that your predecessor and the senior staff at the FDIC, many of whom remain in place today, not only allowed but in fact fostered a culture where political opinion and personal belief trumped the agency’s mission to protect customers of and promote safety and soundness in the banking system.”

Luetkemeyer, chairman of the Financial Institutions and Consumer Credit Subcommittee, has consistently advocated for the end of Operation Choke Point, including through the Financial Institution Customer Protection Act (H.R. 2706) which passed in the House by a 395-2 vote in December 2017, ACA International previously reported.

According to an Oct. 15 news release from Luetkemeyer’s office, the newly-unsealed court documents “revealed additional information exposing the blatant intimidation and bias employed by Obama Administration bureaucrats.”

In addition to an investigation, Luetkemeyer’s letters to Otting and McWilliams also call for “immediate and firm action against any member of their staff who has abused their power.”

In the letter to FDIC and McWilliams, Luetkemeyer notes that the court documents reveal that “senior FDIC Washington staff threatened regional directors with termination should financial institutions engage in business with payday lenders.”

For the OCC’s part, Luetkemeyer said that the agency’s officials denied “knowledge of or participation in Operation Choke Point,” but the court documents show otherwise, according to the letter to Otting.

“It seems OCC staff made the conscious decision, in conjunction with leadership at the FDIC, to use ‘moral suasion’ to suggest strongly that [banks] re-evaluate payday lending,” according to the letter. “Despite his earlier assertions, Comptroller Curry was undoubtedly aware that payday lenders had been specifically targeted, not based on evidence of wrongdoing, but rather on a personal determination that a certain industry or product were distasteful.”

Luetkemeyer’s H.R. 2706 legislation requires federal banking agencies to provide banks or credit unions written justification of any request to terminate or restrict a customer’s account, except in instances of national security, ACA previously reported. The legislation also would require each federal banking regulator to report annually on the number of requests to terminate customer accounts that the FDIC, the National Credit Union Administration (NCUA), the OCC and the Federal Reserve have made to a bank.

“As a former examiner, I find it appalling that senior regulators would not only allow but encourage this type of irresponsible behavior,” Luetkemeyer said in the news release. “The intimidation tactics and implicit bias employed by these unelected bureaucrats stands in direct opposition to the important missions of the agencies. The abuse of power is truly astounding, but I hope that Chairman McWilliams and Comptroller Otting will do what their predecessors consistently declined to do and restore the integrity of their agencies.”

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