Campaign for Liberty opposes "Operation Choke Point"

Campaign for Liberty has joined a coalition letter (text below and linked here) to Senate Judiciary Committee Chairman Charles Grassley asking the Judiciary Committee to question Attorney General nominee Loretta Lynch about "Operation Choke Point" at Lynch's confirmation hearings.

Operation Choke Point is a federal program run by the Department of Justice, the Federal Deposit Insurance Commission, and the Consumer Protection Bureau, supposedly aimed at cracking down on fraud and money laundering. The idea is to pressure banks and other financial institutions to stop doing business with those suspected of criminal activity. However, in practice, it has been a way to squeeze businesses who are out of favor with the administration, such as payday lenders, coin dealers, home-based charities, and (surprise, surprise) tobacco sellers and gun dealers.

Lynch appeared before the Judiciary Committee yesterday, and Senator Mike Lee questioned her about Operation Choke Point (transaction below, video posted at this link):

LEE: “Are you aware that there is a program called Operation Choke Point within the Department of Justice and through this program, the Department of Justice and some other federal law enforcement agencies have on some occasions put financial pressure on legal businesses, including hard-working Americans who happen to be involved in the business of selling firearms and ammunition by essentially telling banks not to do business with them?”

LYNCH: “I’m generally familiar with the name Operation Choke Point and my understanding of it with respect to the Department of Justice's current work -- again, I haven't been involved in either the implementation or the creation of it -- but my general understanding of it is that it looks to target financial institutions that are involved in perpetrating frauds upon consumers in where there might be a financial institution that is facilitating for example consumer bank accounts being looted or consumers essentially who are losing their bank accounts, that that's the target of that. Again, I’m not familiar enough with the specifics of it to know about the underlying businesses that the transaction might have originated from. But that is my understanding of the program.”

LEE: “OK. I assume it is safe to assume should you be confirmed you will work with me to make sure that legitimate law-abiding Americans aren't targeted for their exercising -- their Second Amendment rights.”

LYNCH: “On that and any other issue of importance to you Senator, I look forward to hearing your concerns and working with you on them.”

LEE: “Thank you. Thank you."

Campaign for Liberty will continue to work to end all federal programs that infringe on our Constitutional rights, including the right to keep and bear arms. Here is the text of the letter to Senator Grassley:

January 27, 2015

The Honorable Chuck Grassley, Chairman

Committee on the Judiciary
United States Senate
Washington, D.C. 20510

Dear Mr. Chairman:

As you consider the nomination and move forward with the confirmation process for Attorney General nominee Loretta Lynch, the undersigned groups urge you to ask serious questions about the position of Ms. Lynch as it relates to Operation Choke Point. The Department of Justice (DOJ) has used Operation Choke Point to engage in the blatant intimidation of legal businesses and the undersigned groups have concerns about the nominee’s position on the program and whether or not this program will continue to exist, if she were to be confirmed.

Attorney General Eric Holder and the DOJ have been systematically targeting businesses like payday loans, firearm and ammunition sales, and home-based charities.  It has been reported that the Administration has targeted these companies because of the administration’s distaste of what these companies do and not the legality of these businesses.

Instead of utilizing due process, the DOJ bullies banks into closing bank accounts of “high risk persons.” For example, Wisconsin gun store proprietor Mike Shuetz and his business Hawkins Guns and Heritage Credit Union were targeted under Operation Choke Point.  Audio revealed that the National Credit Union Administration (NCUA) looked into Heritage Credit Union’s books and forced them to shut down Shuetz’s bank accounts. Speaking about the NCUA a Heritage Credit Union regional manager said “So they came in, looked at our books, looked at everything and said ‘here are some accounts that we feel that we’re going to regulate you on,’… so they kind of put the screws to us as far as what we could and couldn’t do.”

There have been cases where the authorities have targeted banks that don’t cooperate with federal officials.  For example, North Carolina’s Four Oaks Bank was slapped with a $1.2 million fine for processing unlicensed payday loan transactions.

These unsettling details about the program show that by threatening increased regulatory supervision, the Administration is using intimidation and threats to make it more difficult for certain industries to have access to financing for credit or loans on no basis other than distaste for the industries by the regulators concerned. This is inappropriate and represents an abuse of regulatory authority.

Members of Congress are starting to expose Operation Choke Point.  Former House Government & Oversight Chair Rep. Darrell Issa (R-Calif.) released a report in December noting that, “Personal animus towards payday lending is apparent throughout the documents produced to the committee… Emails reveal that FDIC’s senior-most bank examiners ‘literally cannot stand payday,’ and effectively ordered banks to terminate all relationships with the industry.”

The confirmation process is an important tool for the Senate in gauging where potential appointees stand on some of the most important issues they will be facing. This process is also an opportunity to ensure that individuals are qualified to hold the position they’ve been selected to take. Ms. Lynch, like most Presidential nominees, has kept mostly quiet on some of the major issues she will be answering questions about once her confirmation process begins and that includes her views on Operation Choke Point.

We hope that you will take this opportunity during the confirmation process to pose serious questions to Ms. Lynch about her views on Operation Choke Point and whether or not she will put an end to this harmful and destructive DOJ program and what her views are when it comes to the power of the federal government to use regulations to interfere with institutions and industries an administration may not like.


David Williams, President, Taxpayers Protection Alliance
George Landrith, President, Frontiers of Freedom
Phil Kerpen, President, American Commitment
Seton Motley, President, Less Government
Jeff Mazzella, President, Center for Individual Freedom
John Tate, President, Campaign for Liberty
Iain Murray, Vice President, Competitive Enterprise Institute
Andrew Langer, President, Institute for Liberty
Michael Ostrolenk, National Director, Liberty Coalition
Brian Wise, US Consumer Coalition

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