A Massachusetts gun seller says it’s the latest victim of a federal multiagency task force that is squeezing financing sources for industries deemed “high-risk” by the Obama administration, such as porn stores, drug paraphernalia shops and gun merchants.
Powderhorn Outfitters, which sells firearms, archery gear and fishing equipment in Hyannis, Massachusetts, posted in an online forum this week that its longtime bank — TD Bank — had suddenly dropped its account.
“TD Bank does not support the Second Amendment and has contacted us here at the Powderhorn to say that due to our involvement in firearms sales, we as a business are no longer welcome to have an account at their bank,” the sporting goods store posted on northeastshooters.com, an online forum for shooting enthusiasts in New England states. “They classify us in the same gray area as the local weed shops sprouting up on the Cape.”
Powderhorn said it has moved its business to “a bank that does support the Second Amendment.”
“I won’t roll over for anybody,” Mark Cohen, owner of the Massachusetts-based store, told The Washington Times. Powderhorn decided to stop doing all of its business with TD Bank after it denied a loan to them, he said. Mr. Cohen is also transferring his private accounts from the bank.
“Our loan was turned not because of our credit — we had perfect financials and been working with the same bank manager for 20 years. It was just because we sell guns — and they said that to us specifically,” he said.
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TD Bank, which is based in Maine, declined to speak about Mr. Cohen’s case specifically, citing privacy issues.
Erin Potts, a spokeswoman for the company, however, said: “While we cannot discuss specific details about our customers due to privacy laws, I can tell you that TD Bank evaluates each prospective lending relationship to ensure that we are operating within our risk appetite and only taking risks we can understand and manage.”
The Times reported last week of gun retailers’ complaints that the administration is bypassing Congress and is using increased scrutiny by financial regulators to choke off their lines of credit and squeeze them out of business.
Since 2011, the Federal Deposit Insurance Corp. has directed banks to scrutinize the risks of their merchant customers who use payment processors, such as PayPal, for credit card transactions. In addition, the Justice Department has launched “Operation Choke Point,” a credit card fraud probe ensnaring banks that do business with 24 industries deemed “high-risk” by the FDIC.
“The ‘choke point’ in this operation is the nation’s payments infrastructure, the means by which merchants process nearly $5 trillion in consumer purchases in the U.S. each year,” Jason Oxman, CEO of the Electronic Transactions Association, said in an op-ed for The Hill last month.
“Federal law enforcers are targeting merchant categories like payday lenders, ammunition and tobacco sales and telemarketers — but not merely by pursuing those merchants directly. Rather, Operation Choke Point is flooding payments companies that provide processing service to those industries with subpoenas, civil investigative demands and other burdensome and costly legal demands,” Mr. Oxman wrote.
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The Justice Department has defended the operation, saying it is aimed at catching online fraudsters with whom banks knowingly do business.
“We’re committed to ensuring that our efforts to combat fraud do not discourage or inhibit the lawful conduct of these honest merchants,” the Justice Department said in a May 7 blog post.
But the entire operation is an assault on the free market, says Thomas Bezas, executive director of the United States Consumer Coalition, a nonprofit that was formed to fight back against Operation Choke Point.
“This is simply an example of how the administration is constricting consumer choice,” said Mr. Bezas. “They’re targeting various industries, using banks as the weapon of choice.”
“Many of these industries have been around for decades, have been the breadwinners for their households and are being run by good and decent people around the country,” he said.
Operation Choke Point has caught the attention of lawmakers in Congress, who have called for investigative hearings and potential legislation if the operation isn’t stopped.
In a scathing letter to Attorney General Eric Holder in January, Republican Reps. Darrell Issa of California and Jim Jordan of Ohio requested all federal documents related to Operation Choke Point. Mr. Issa heads the House Committee on Oversight and Government Reform, and Mr. Jordan is a member of Mr. Issa’s panel and the House Committee on the Judiciary.
The “extraordinary breadth of the [Justice] Department’s dragnet prompts concern that the true goal of Operation Choke Point is not to cut off actual fraudsters’ access to the financial system but rather to eliminate legal financial services to which the Department objects,” the congressmen said in their letter, of which The Washington Times has obtained a copy.