Obama’s ‘Operation Choke Point’ - Arnold Ahlert

by Arnold Ahlert

“It’s appalling that our government is working around the law to vindictively attack businesses they find objectionable,” Rep. Darrell Issa (R-CA), Chairman of the House Oversight and Government Reform Committee, said in a press release.

Almost unbelievably, the Obama administration is involved in another scandalous abuse of power, one that has largely escaped the public’s attention. The House Oversight and Government Reform Committee released a report December 8 detailing the abuses by the Federal Deposit Insurance Corporation (FDIC), operating under the auspices of a program known as Operation Choke Point. Run by the Departments of Justice and Treasury, Operation Choke Point was supposed to target illegal businesses and prevent them from obtaining access to the U.S. financial system. Yet damning emails unearthed by investigators reveal regulatory officials were motivated by personal animus toward certain businesses. “It’s appalling that our government is working around the law to vindictively attack businesses they find objectionable,” Rep. Darrell Issa (R-CA), Chairman of the House Oversight and Government Reform Committee, said in a press release.

“Internal FDIC documents confirm that Operation Choke Point is an extraordinary abuse of government power,” Issa. “In the most egregious cases, federal bureaucrats injected personal moral judgments into the regulatory process. Such practices are totally inconsistent with basic principles of good government, transparency and the rule of law.”

Operation Choke Point was publicly introduced in March of 2013, when Financial Fraud Enforcement Task Force Executive Director Michael J. Bresnickat bought it up in a speech at Washington D.C.’s Exchequer Club. Bresnickat assured his audience the reason the program was “focused on financial institutions and payment processors is because they are the so-called bottlenecks, or choke-points, in the fraud committed by so many merchants that victimize consumers and launder their illegal proceeds.”

Five months later, the Wall Street Journal revealed the troubling reality that one of the first targets of the program were payday lending operations. Peter Barden, spokesman for the Online Lenders Alliance, sounded the initial warning, noting government pressure forcing banks to stop payment processing “would cut off an important credit choice for millions of underserved consumers” and “send a troubling message to banks that at any point regulators can force them to stop processing legal transactions simply because they don’t like a particular merchant or industry.”

In January 2014, Issa, along with Economic Growth Subcommittee Chairman Rep. Jim Jordan (R-OH), sent U.S. Attorney General Eric Holder a letter expressing concern that “both the goal and mechanisms of Operation Choke Point may constitute a serious mismanagement and abuse of the Department’s FIRREA [Financial Institution Reform and Recovery Act of 1989] authority.”

Issa wanted answers. The DOJ felt it was under no obligation to provide them.

By the end of May 2014, Issa’s concern had morphed into outrage. He issued a report contending Operation Choke Point was so “flagrantly illegal” it was beyond legal rehabilitation. “In light of the Department’s obligation to act within the bounds of the law, and its avowed commitment not to ‘discourage or inhibit’ the lawful conduct of honest merchants, it is necessary to disavow and dismantle Operation Choke Point,” the report stated. It further noted that Holder knew about the program prior to its launch, that he knew it was aimed at targeting legal entities—and that he nonetheless fully supported its implementation. Furthermore, the report suggested that once the program became public, the DOJ may have attempted to cover up parts of its operation.

It was also discovered that Operation Choke Point had expanded beyond the payday lending industry, targeting manufacturers, distributors, and dealers of firearms and ammunition, as well as coin dealers. And it was also revealed that a January 23, 2014 deadline regarding Issa’s request for information came and went absent any indication the DOJ had fulfilled it.

Three days later, MyFoxdc.com issued a report on Operation Choke Point alleging the program targeted the gun industry because Obama failed to get gun control legislation passed by Congress. If such an effort has a familiar ring, it’s because Obama has employed precisely the same Congress-bypassing tactic with regard to illegal immigration. At that time, The National Shooting Sports Foundation revealed many of its members in the firearms and ammunitions manufacturing industries had had their banking relationships wrongfully terminated by the program.

The report released Dec. 8 put the pernicious scope of the program in full perspective. Its key findings reveal the FDIC “equated legitimate and regulated activities…with inherently pernicious or patently illegal activities,” via “circular argument policymaking”–an original list of high-risk merchants were determined by FDIC, who then justified formal guidelines for banks by claiming the categories “had been previously noted”—by the FDIC itself.

The most egregious revelations centered around FDIC policymakers whose “personal animus” towards the payday industry was so intense that their senior-most bank examiners “effectively ordered banks to terminate all relationships with the industry.” An email from Thomas Dujenski, FDIC’s Atlanta regional director, to Mark Pearce, director of the Division of Depositor and Consumer Protection underscores that personal animus:

I have never said this to you (but I am sincerely passionate about this) … but I literally cannot stand the pay day lending industry … I had extensive involvement with this group of lenders and was instrumental in drafting guidance on stopping abuses.

Another damning email reveals that John Miller, Deputy Director for Policy and Research in the Division of Depositor and Consumer Protection at the FDIC, was concerned about “taking pornography” out the equation in letters about targeted businesses to Congress. The redacted writer of the email expressed his concern that lumping pornography in with online gambling and payday loan companies might make it appear that the FDIC was making “moral judgments regarding the types of businesses with which our institutions deal.” The email continues:

Jonathan heard where we were coming from but nonetheless wants to retain a reference to pornography in our letters/talking points. He thinks it’s important for Congress to get a good picture regarding the unsavory nature of the businesses at issue. He repeated that ‘one is judged by the friends one keeps,’ and he seems to feel strongly that including payday lenders in the same circle as pornographers and on-line gambling businesses will ultimately help with messaging on this issue.

If you feel there is legal argument beyond the one I made, and would like us to push back on this issue, please let me know.

The report’s conclusions are unambiguous. “The practical impact of Operation Choke Point is incontrovertible: legal and legitimate businesses are being choked off from the financial system,” it states, further noting the experiences endured by firearms and ammunition dealers “is a testament to the destructive and unacceptable impact of Operation Choke Point.” The report’s last paragraph is a testament to the corrupt nature of the Obama administration and its power-abusing impulses:

“At a minimum, Operation Choke Point is little more than government-mandated de-risking. FDIC, in cooperation with the Justice Department, made sure banks understood–or in their own language, ‘got the message’–that maintaining relationships with certain disfavored business lines would incur enormous regulatory risk. The effect of this policy has been to deny countless legal and legitimate merchants access to the financial system and deprive them of their very ability to exist. Accordingly, Operation Choke Point violates the most fundamental principles of the rule of law and accountable, transparent government.”

Last June, Senator Rand Paul (R-KY) filed an amendment to the Science Justice Commerce Appropriations bill attempting to cut off the administration’s efforts to effectively shut down gun stores via Operation Choke Point. It followed the May 2014 passage of a House amendment sponsored by Rep. Blane Luetkeymeyer (R-MO) to defund the program. It was ultimately approved by 204 Republicans and 117 Democrats. An article published by Human Events on Nov. 17, 2014 indicates the program has yet to be addressed in the still Democratically-controlled Senate.

After trying several senators’ offices, FrontPage contacted a source in Washington, D.C. who requested anonymity. He made a valiant effort to find any mention of the Operation Choke Point in the recently passed $1.1 trillion CRomnibus bill funding the federal government for FY2015. The search proved unsuccessful, indicating that it is more than likely Operation Choke Point remains alive and well. It behooves a GOP-controlled Congress to kill this egregious abuse of power as one of its first orders of business next year. The American public has no use whatsoever for public officials willing to trample the law to satisfy their personal worldview. In short, it’s time to strangle Operation Choke Point.

Arnold Ahlert

Source: http://www.frontpagemag.com/2014/arnold-ahlert/obamas-operation-choke-point/

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