FDIC attempts to end Operation #Chokepoint

Washington TimesIn an effort to put an end to Operation Choke Point — a financial task force that was created by the Obama administration to “choke out” businesses it finds objectionable like gun shops — the Federal Deposit Insurance Corp. issued a letter Wednesday saying all banks should examine their customer relationships on a case-by-case basis and not by industry operational risk.

The government agency followed the action with a memorandum to its supervisory staff requiring examiners put in writing their recommendation to terminate an account, which the financial institution must review before the account is ended.

This is a big deal if the FDIC actually has the authority to enforce it. The letter to banks will counteract the pressure to close accounts of politically-disfavored businesses, and more importantly the requirement to make recommendations in writing will provide for an evidence trail in cases where accounts are actually closed due to government regulatory pressure.

I do find myself with some uncomfortable questions, though.

First, obviously this doesn't address past issues.
Second, it won't stop people from giving "advice" and not putting it in writing. It may discourage it, but it can't stop it.
Third, Operation Chokepoint has generally been described as a joint operation with the Department of Justice. The details aren't known, but FDIC doesn't necessarily have authority over everyone involved.

Washington Times
“We’ve gone down that road and have choked off Choke Point,” said Mr. Luetkemeyer in an interview with The Washington Times. “The FDIC has acknowledged wrongdoing and put in place measures to stop this activity.”

Admission of wrongdoing sounds like lawsuits can and should be filed pronto.

This is big news, and I wonder if -- like with the IRS case -- an internal investigation is driving the desire to get out in front of the news cycle with this.

This entry was published Thu Jan 29 00:25:37 CST 2015 by TriggerFinger and last updated 2015-01-29 00:25:28.0. [Tweet]

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