In a step forward in battling government overreach and backroom dealing, Judge Gladys Kessler of the U.S. District Court for the District of Columbia ruled on Wednesday, July 5 that Advance America and other short-term lenders may press forward with a lawsuit against federal bank regulators for colluding to cut off access to the banking industry, dubbed Operation Choke Point. With the judge's ruling, discovery in the case begins immediately.
As reported by American Banker, despite a changeover in presidential administration, regulated short-term lenders are still feeling the effects from Operation Choke Point, an Obama-era initiative across the U.S. Department of Justice (DOJ), Federal Deposit Insurance Corporation (FDIC) and the Office of the Comptroller of the Currency (OCC) aimed at eliminating law-abiding short-term lenders. Dennis Shaul, CEO of the Community Financial Services Association of America (CFSA), told Bloomberg that "for years, Operation Choke Point has threatened to suffocate the ability of legal and licensed businesses to operate freely and fairly, and the government bureaucrats who started this must be held accountable." He added that "until justice is served, businesses will continue to operate in fear of the government's unjust ideological crusade."
Judge Kessler's ruling follows a number of recent events on Capitol Hill to address this shadow campaign against law-abiding businesses.
The House Judiciary Committee rolled out legislation to eliminate Operation Choke Point.
Missouri Republican Rep. Blaine Luetkemeyer reintroduced a bill to combat Operation Choke Point in May and expects a hearing and then a markup following the August recess. The bill, titled the Financial Institution Customer Protection Act, would require banks to present regulators with "material reason" for terminating the accounts of short-term lenders, and prohibits account termination based solely on "reputational risk."
House Judiciary Committee Members met with members of the industries harmed by Operation Choke Point.
On Friday, June 23, House Judiciary Chairman Bob Goodlatte (R-VA), Rep. Luetkemeyer and California Republican Rep. Darrell Issa hosted a roundtable discussion on Capitol Hill, which I attended on behalf of Advance America to describe how Operation Choke Point has affected our company. As I shared at the roundtable and with The Daily Caller, since 2013, Advance America has lost 21 banking relationships for no reason other than high-ranking officials at several regulatory agencies found personal disfavor with our business. Most recently, U.S. Bank was forced to cut ties with Advance America, affecting about 60 percent of the company's centers.
Republican Senators urged Attorney General Jeff Sessions to confirm the end of Operation Choke Point.
According to American Banker, Sen. Thom Tillis (R-NC) and Senate Banking Committee Chairman Mike Crapo (R-ID) sent a letter to Attorney General Sessions on July 6 stating that, despite previous assurances of its end, Operation Choke Point continues. The letter calls on Sessions to issue a statement declaring the initiative no longer in effect. Sen. Tillis and Chairman Crapo aren't the only members of Congress keeping tabs on Operation Choke Point's ongoing impact; Rep. Luetkemeyer's office reportedly maintains an active list of businesses who report unfairly losing bank accounts.
As Sen. Tillis and Chairman Crapo wrote, "There is no place for a political agenda in oversight of the banking system, and Operation Choke Point must end once and for all." As the lawsuit moves to the discovery phase, federal regulators' overreach will be further exposed, but plenty of damage has already been inflicted on Advance America and other law-abiding, regulated businesses, as well as our employees and customers. It's time for the DOJ and federal regulators to finally put a stop to this unfair political plot.