Ideological Motives Drive Operation Choke Point
The House Oversight and Government Reform Committee recently uncovered new documents detailing the extent that the Federal Deposit Insurance Corporation (FDIC), the Department of Justice (DOJ) and other regulatory agencies targeted lawful businesses they deemed “unsavory” through Operation Choke Point. In particular, the documents underscore that officials object to payday lending based solely on personal ideology â€“ and despite the fact that there is no reported wrong-doing:
- In emails, the FDIC’s senior-most bank examiners expressed personal disdain for payday lending and threatened banks with relationships with the industry with further examination. One senior bank examiner wrote to another FDIC official, “I literally can not (sic) stand pay day (sic) lending,” and they “do not deserve to be in any way associated with banking.”
- Despite a cautionary warning from legal counsel, a senior official insisted that FDIC Chairman Martin Gruenberg’s letters to Congress and talking points always mention pornography when discussing payday lenders to convey a “good picture regarding the unsavory nature of the businesses at issue,” and to “ultimately help with the messaging on this issue.”
These findings are the latest in a series of reports that illustrate the apparent vendetta federal regulators continue to wage against regulated payday lenders and other legitimate businesses based on biased judgments, not the rule of law. For instance:
- On Dec. 9, Rep. Blaine Luetkemeyer (R-MO) met with FDIC Chairman Martin Gruenberg about the agency’s involvement in Operation Choke Point, and expressed his dismay that “senior members of the FDIC lied to me, to Congressional staff, to other Members of Congress, and in testimony to several House Committees.” Rep. Luetkemeyer continued, “The FDIC is inserting personal views into banking supervision, which is unethical and completely unacceptable.”
- Rep. Luetkemeyer was in part referencing testimony from FDIC Acting General Counsel Richard J. Osterman, who repeatedly dismissed the FDIC’s involvement with Operation Choke Point in testimony before the House Financial Services Committee in April. Since then, his statements have been soundly discredited by documents produced by the DOJ and FDIC.
- In October, it was uncovered that an FDIC regional director effectively ordered a bank to terminate all relationships with payday lenders, saying, “Consequently, we have generally found that activities related to payday lending are unacceptable for an insured depository institution.”
It is shocking to read these regulators’ own words attacking a legal business valued by millions – words that directly resulted in banks indiscriminately terminating relationships with legitimate merchants – but encouraging that the Oversight Committee and others in Congress continue to apply appropriate scrutiny to this operation. Just last month, the FDIC and DOJ announced that they will investigate their roles in Operation Choke Point following inquiries from Rep. Luetkemeyer’s office and more than 30 members of Congress.
You can find the Committee’s full release here.