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Washington Dc: FDIC United States Federal Deposit Insurance Corporation sign on wall of building with logo on 17th street in evening night closeup. Credit: Getty royalty free.
Luetkemeyer’s legislation to prevent a redo of Choke Point – The Financial Institution Customer Protection Act of 2017 – overwhelmingly passed the House, with only two nay votes. Operation Choke Point was an egregious affront to the rule of law, so it is good to see that so many lawmakers want to prevent a repeat.
For those unfamiliar, Choke Point consisted of bureaucrats in several independent federal agencies taking it upon themselves to shut legal businesses – such as payday lenders and firearms dealers – out of the banking system. Given the nature of the U.S. regulatory framework, this operation was easy to pull off.
Officials at the Federal Deposit Insurance Corporation (FDIC), for instance, simply had to inform the banks they were overseeing that the government considered certain types of their customers “high risk.” The mere implication of a threat was enough to pressure banks into closing accounts, because no U.S. bank wants anything to do with extra audits or investigations from their regulator, much less additional operating restrictions or civil and criminal charges.
Banks are incredibly sensitive to any type of pressure from federal regulators, and they know that the regulators have enormous discretion. The new revelations are quite scary because they show exactly what federal regulators can do with that discretion – even to law-abiding citizens. As Rep. Luetkemeyer points out:
In one example of blatant intimidation, a bank terminated its relationship with a legal business after threats from the FDIC. The bank eventually surrendered to the pressure, and when the bank notified the FDIC of the decision, they admitted that a risk assessment showed the business “pose[d] no significant risk to the financial institution, including financial, reputation, and legal risk,” yet they still terminated the banking relationship.
For years, Office of the Comptroller of the Currency officials have continually denied any wrongdoing, yet in the newly-unsealed documents we see proof of a conscious decision to work in conjunction with the FDIC against payday lenders.
In fact, the evidence suggests that the highest-ranking officials at the FDIC were involved in Choke Point. For instance, on page 5, the following facts are revealed:
In late 2010 or early 2011, the FDIC’s senior Washington officials convened a meeting of all Regional Directors. (Emphasis added.)
At this meeting in which all of these Regional Directors (or their designees) were gathered, the Senior Deputy Director for the Division of Supervision and Consumer Protection informed them that “if an institution in their region was facilitating payday lending, the Regional Director should require the institution to submit a plan for exiting the business.”
These instructions, the Senior Deputy Director, conveyed, came from “the sixth floor”—the Chairman and senior leadership of the agency
At the meeting, the Senior Deputy Director conveyed the following message: “if a bank was found to be involved in payday lending, someone was going to be fired.”
Other sections of the unsealed documents show that government officials undertook a concerted effort to stop bank owners from publicly revealing these regulatory shakedowns. For instance:
[Associate Director] Mr. Brown responded that “because of legal considerations, the FDIC has never expressly stated publically that our supervised institutions are not permitted to do business with payday lenders but the payday lending guidance and our public posture makes clear that we view payday loans as extremely risky.” When [Deputy-Director] Mr. Miller inquired whether this hostility extended to “having a deposit rel’shp” with a payday lender, in addition to offering payday loans directly, Brown responded that “[w]e’re doing more leg work on this,” but that when such a relationship had been considered previously “the Chairman was unhappy about [that type of] arrangement.” (See page 14).
Later, in April 2013, Joel Sweet, a Justice Department official heavily involved in the initiative, emailed senior officials at the FDIC, the FTC, the CFPB and other federal agencies with “a simple and elegant idea about how to protect consumers from predatory PD lenders.” The idea involved banning banks from “originating debit transactions against the bank accounts of non-customer borrowers.” (See page 16).
In an email to Director Pearce, for example, [Atlanta Regional] Director Thomas Dujenski emphasized that he was “sincerely passionate” about the fact that “I literally cannot stand payday lending. They are abusive, fundamentally wrong, hurt people, and do not deserve to be in any way associated with banking.” Director Dujenski continued: “I really hope this bank we discussed truly gets out of this on their own as they are indicating….I hope my persuasion skills are still effective :)” (See page 22).
According to the bank chairman in question, Director Dujenski also asked him whether he was aware that bank directors could be subject to criminal prosecution. (See page 25).
In response to the email informing him about these efforts to dissuade the Chairman from referring to a “de facto” FDIC policy discouraging payday lending, Director Dujenski replied with an email consisting of a single emoticon: “J” (See page 26).
It is now clear that these unelected government officials set out to harm law-abiding citizens. Yet many of the government officials named in these documents are still employed by the same government agency. Most of these folks work atthe FDIC, and one has even moved up from a regional director position toFDIC Ombudsman.
At the very least, the Trump administration owes the public a full investigation into Operation Choke Point and an explanation for why many of the people involved in this abuse of power are still working for the government.
I am a Research Fellow in Financial Regulations in The Heritage Foundation’s Roe Institute for Economic Policy Studies. I also research monetary policy and other issues…MORE
Keep these in mind as you contemplate the direction of the American government over the past 50 years and especially since the Obama election.
The Goals of Communism
(as read into the congressional record January 10, 1963, from "The Naked Communist" by Cleon Skousen)
1. U.S. acceptance of coexistence as the only alternative to atomic war.
2. U.S. willingness to capitulate in preference to engaging in atomic war.
3. Develop the illusion that total disarmament of the United States would be a demonstration of moral strength.
4. Permit free trade between all nations regardless of Communist affiliation and regardless of whether or not items could be used for war.
5. Extension of long-term loans to Russia and Soviet satellites.
6. Provide American aid to all nations regardless of Communist domination.
7. Grant recognition of Red China. Admission of Red China to the U.N.
8. Set up East and West Germany as separate states in spite of Khrushchev's promise in 1955 to settle the German question by free elections under supervision of the U.N.
9. Prolong the conferences to ban atomic tests because the United States has agreed to suspend tests as long as negotiations are in progress.
10. Allow all Soviet satellites individual representation in the U.N.
11. Promote the U.N. as the only hope for mankind. If its charter is rewritten, demand that it be set up as a one-world government with its own independent armed forces. (Some Communist leaders believe the world can be taken over as easily by the U.N. as by Moscow. Sometimes these two centers compete with each other as they are now doing in the Congo.)
12. Resist any attempt to outlaw the Communist Party.
13. Do away with all loyalty oaths.
14. Continue giving Russia access to the U.S. Patent Office.
15. Capture one or both of the political parties in the United States.
16. Use technical decisions of the courts to weaken basic American institutions by claiming their activities violate civil rights.
17. Get control of the schools. Use them as transmission belts for socialism and current Communist propaganda. Soften the curriculum. Get control of teachers' associations. Put the party line in textbooks.
18. Gain control of all student newspapers.
19. Use student riots to foment public protests against programs or organizations which are under Communist attack.
20. Infiltrate the press. Get control of book-review assignments, editorial writing, policymaking positions.
21. Gain control of key positions in radio, TV, and motion pictures.
22. Continue discrediting American culture by degrading all forms of artistic expression. An American Communist cell was told to "eliminate all good sculpture from parks and buildings, substitute shapeless, awkward and meaningless forms."
23. Control art critics and directors of art museums. "Our plan is to promote ugliness, repulsive, meaningless art."
24. Eliminate all laws governing obscenity by calling them "censorship" and a violation of free speech and free press.
25. Break down cultural standards of morality by promoting pornography and obscenity in books, magazines, motion pictures, radio, and TV.
26. Present homosexuality, degeneracy and promiscuity as "normal, natural, healthy."
27. Infiltrate the churches and replace revealed religion with "social" religion. Discredit the Bible and emphasize the need for intellectual maturity which does not need a "religious crutch."
28. Eliminate prayer or any phase of religious expression in the schools on the ground that it violates the principle of "separation of church and state."
29. Discredit the American Constitution by calling it inadequate, old-fashioned, out of step with modern needs, a hindrance to cooperation between nations on a worldwide basis.
30. Discredit the American Founding Fathers. Present them as selfish aristocrats who had no concern for the "common man."
31. Belittle all forms of American culture and discourage the teaching of American history on the ground that it was only a minor part of the "big picture." Give more emphasis to Russian history since the Communists took over.
32. Support any socialist movement to give centralized control over any part of the culture--education, social agencies, welfare programs, mental health clinics, etc.
33. Eliminate all laws or procedures which interfere with the operation of the Communist apparatus.
34. Eliminate the House Committee on Un-American Activities.
35. Discredit and eventually dismantle the FBI.
36. Infiltrate and gain control of more unions.
37. Infiltrate and gain control of big business.
38. Transfer some of the powers of arrest from the police to social agencies. Treat all behavioral problems as psychiatric disorders which no one but psychiatrists can understand.
39. Dominate the psychiatric profession and use mental health laws as a means of gaining coercive control over those who oppose Communist goals.
40. Discredit the family as an institution. Encourage promiscuity and easy divorce.
41. Emphasize the need to raise children away from the negative influence of parents. Attribute prejudices, mental blocks and retarding of children to suppressive influence of parents.
42. Create the impression that violence and insurrection are legitimate aspects of the American tradition; that students and special-interest groups should rise up and use united force to solve economic, political or social problems.
43. Overthrow all colonial governments before native populations are ready for self-government.
44. Internationalize the Panama Canal.
45. Repeal the Connally reservation so the United States cannot prevent the World Court from seizing jurisdiction over nations and individuals alike.
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