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beyond-guns-operation-choke-point-targets-coin-dealers-tobacco-and-pay-day-lendersHuman Events:

Capitol Hill conservatives are coming to realize that Operation Choke Point, President Barack Obama’s program to use banking and financial services regulations to shut down gun and ammunition businesses is actually a wider program with wider ambitions.


Operated by the Department of Justice, Choke Point has its roots in the concerns by regulators at both the Federal Deposit Insurance C and the Federal Reserve about electronic transactions passing through the ACH, or Automated Clearing House, by third-party-payment-processors. Among the chief concerns are how to resolve refund requests based on fraud and how to trace and freeze funds that are part of an illegal enterprise.


Intent on scaring banks, the FDIC published a list of “high-risk” businesses with clear message that financial institutions looking to curry favor with regulators with back out of any transactions on the high-risk list.

Products or services on the list include, fireworks, prostitution, racist materials and cable box descramblers.Scissors-32x32.png

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Lawmakers Throw Light on Secretive ‘Operation Choke Point’


Is “Operation Choke Point” about to get choked by Congress? Rep. Darrell Issa, R-Calif., sure hopes so.


Issa, chairman of the House Oversight and Government Reform Committee, is calling for the dismantling of what he calls a secretive initiative launched by the Obama administration in early 2013.


Critics say that Operation Choke Point, so dubbed by Department of Justice officials under Attorney General Eric Holder, seeks to weed out businesses from the marketplace that the Obama administration considers objectionable. According to The Wall Street Journal, it was an outgrowth of the Financial Fraud Task Force, established by President Obama’s executive order early in his first term.


The initiative, Issa said last week, is a slippery slope:


“If you empower the government to pick winners and losers within a lawful enterprise, then there is no place to stop.”


Initially, in the wake of the 2008 financial crisis, officials targeted small-dollar, nonbank lenders. But it grew to include other legal, legitimate businesses such as gun dealers and tobacco vendors at Walmart and Bass Pro Shop.


Issa, speaking on Operation Choke Point at Cato Institute, called it “proactive, progressive activity” by government against banks and other legitimate businesses.Scissors-32x32.png


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Operation Choke Point Hearing Reveals DOJ Threats And Strong-Arming


A Justice Department fraud prevention program came under fire Thursday for allegedly morphing into actively pressuring banks to deny financial services to businesses for political reasons.


Operation Choke Point functions as a partnership between the Department of Justice (DOJ) and various other federal agencies which deal with bank regulations, specifically the Treasury and the SEC. The objective of the project is to choke-off fraudulent businesses from accessing financial services, in an effort to protect consumers.


The controversy, however, is over allegations that the DOJ is pressuring financial institutions to decline doing business with so-called “high risk” industries which line up squarely against the political leanings of the current administration. These businesses include ammunition sales, payday loans, pornography, fireworks companies, and others—24 industries in total, as listed by the Federal Deposit Insurance Corporation (FDIC).


“Operation Choke Point is one of the most dangerous programs I have experienced in my 45 years of service as a bank regulator, bank attorney and consultant, and bank board member. Operating without legal authority and guided by a political agenda, unelected officials at the DOJ are discouraging banks from providing basic banking services…to lawful businesses simply because they don’t like them,” said William M. Isaac, former chairman of the FDIC.Scissors-32x32.png


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