[2/20/17] The U.S. federal bureaucracy doesn’t often admit wrongdoing. This time it took a change in the political landscape, many businesses threatening legal action and a congressman with a background in banking to force the bureaucracy to admit to misconduct and to stop financial attacks on legal businesses that the Obama administration deems to be politically incorrect.
This week the Federal Deposit Insurance Corporation (FDIC) published a statement saying they are instituting changes to stop Operation Choke Point’s discriminatory practices against legal businesses. The U.S. Justice Department still contends that Operation Choke Point is an initiative designed to reduce unlawful fraud by “choking” illegal players out of U.S. financial institutions. However, under direction of the FDIC, Operation Choke Point also affected the banking relationships of many legal businesses, including those of gun stores and other firearms-related companies. Some law-abiding businesses had their long-standing banking relationships terminated as a result of threats from the FDIC to censure financial institutions that do business with gun stores and other firearms-related businesses. Some examples of legal businesses being harmed were included in a report by the House Oversight Committee; still more examples were documented in research done by The Heritage Foundation’s The Daily Signal.
The letter from the FDIC says, “The FDIC is aware that some institutions may be hesitant to provide certain types of banking services due to concerns that they will be unable to comply with the associated requirements of the Bank Secrecy Act (BSA)….” As a result, the FDIC says it is now “encourage[ing] institutions to take a risk-based approach in assessing individual customer relationships rather than declining to provide banking services to entire categories of customers….”
U.S. Rep. Blaine Luetkemeyer (R-Mo.), who was once a bank regulator for the state of Missouri and who now is a member of the House Financial Services Committee, released a statement after a meeting with FDIC Chairman Martin Gruenberg and Vice Chairman Tom Hoenig, that said in part: “After a year of mounting pressure from Congress and outside organizations like the National Shooting Sports Foundation, top officials from the Federal Deposit Insurance Corporation finally acknowledged their involvement and wrongdoing in Operation Choke Point. While I am very pleased the FDIC will put in place new polices and change the culture at the agency, there is still work to be done, specifically with the Department of Justice. I am pleased the National Shooting Sports Foundation supports my legislation, the Financial Institution Customer Protection Act, and I have no doubt the foundation will remain steadfast in educating its members and continuing the fight in ending Operation Choke Point once and for all.”