The White House puts “Chicago-style” politics on steroids. Government agencies charged with administering the law without fear or favor are instead harassing businesses and individual citizens out of the administration’s favor. The Justice Department and Federal Deposit Insurance Corporation cooked up something called “Operation Choke Point,” a scheme of thuggery and intimidation to deny financial services to industries on the administration’s enemies list.
After its representatives were grilled painfully and extensively by congressional committees, the Federal Deposit Insurance Corporation revised the “Choke Point” guidelines, eliminating the most egregious provisions while leaving the program otherwise intact.
Initially, the government regulator spelled out a list of industries the government considers “high risk.” In the name of protecting consumers, it badgered major banks into denying these “risky” companies access to banking and processing services for credit-card sales.
The original guidelines included a long list of various types of get-rich-quick schemes that should reasonably draw extra scrutiny, but tucked in among those “bad” businesses were gun stores, cigar shops, fireworks stands, coin dealers and payday lenders. These businesses were to be singled out, not because any store had violated the law, but because the Obama administration just doesn’t like guns, fireworks or tobacco. (We’re not sure what it has against coin collectors.)
Top Gun Firearms, for example, a legitimate and widely respected gun dealer in Miami, was cut off from its local bank and left unable to process orders over the Internet. All it took was a telephone call from regulators to the bank. A bank manager naturally fears the wrath of federal banking busybodies and would rather drop a good customer than face an audit or fines.
In its retreat, the Federal Deposit Insurance Corporation (FDIC) told major banks that they could, after all, do business with gun stores and tobacco shops. “In fact,” the regulator said, “it is FDIC’s policy that insured institutions that properly manage customer relationships are neither prohibited nor discouraged from providing services to any customer operating in compliance with applicable law.”
This is the usual response of a bureaucracy caught red-handed doing something it shouldn’t. Rather than take responsibility, Richard Osterman, the FDIC’s acting general counsel, told the American Banker magazine that financial institutions had “misinterpreted” the lists they were provided. Nobody believes an explanation like that.
It’s far more likely that the White House, Justice Department and FDIC knew exactly what they were doing when they put Operation Choke Point together as a backdoor means of suffocating enemies in the name of protecting consumers. This is of a piece with the old Chicago custom of breaking a merchant’s windows and offering “insurance” that it won’t happen again.
The scheme may now shift to the secretive Consumer Financial Protection Bureau, which Democrats set up with a funding mechanism designed to bypass Congress and insulate the agency from oversight. Sen. Sherrod Brown, Ohio Democrat, recently called on the bureau to take over persecution of short-term lenders.
If this unaccountable bureau can go after payday lenders, a legal business that the FDIC says serves 43 percent of U.S. households, there’s nothing to stop the agency from persecuting other businesses out of administration favor. Thuggery is the tool of crooks, not government. We thought Barack Obama wanted to be better than this.