PLEASE TAKE THE TIME TO UNDERSTAND THE IMPACT OF THIS ASSAULT...
Operation Choke Point, a credit card fraud task force run by the Justice Department, was created to “choke out” businesses the Obama administration finds objectionable, according to a congressional committee report obtained by The Washington Times.
The administration is knowingly targeting so-called “high risk” businesses — which include payday lenders, gun retailers and ammunition merchants — despite the fact they are legitimate, says a staff report by the House Committee on Oversight and Government Reform.
SEE ALSO: Operation Choke Point forces bank to dump gun store
Internal documents within the Justice Department acknowledge the program’s impact on legitimate merchants, the report says. Attorney General Eric Holder was informed that banks were exiting entire lines of business deemed “high risk” by the government, yet his agency continued to pursue the operation.
“Operation Choke Point is the Justice Department’s newest abuse of power,” Rep. Darrell Issa, California Republican and committee chairman, said in a statement. “If the administration believes some businesses should be out of business, they should prosecute them before a judge and jury. By forcibly conscripting banks to do their bidding, the Justice Department has avoided any review and any check on their power.”
The Washington Times has reported that several gun retailers have been dropped by their banks as a result of the operation, the most recent being Powderhorn Outfitters, a sporting goods shop in Hyannis, Mass., which was dropped by its bank of 36 years — TD Bank — last week.
“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,” company spokeswoman Erin Potts said.
The Justice Department was well aware that some banks were dropping so-called “high risk” industries because of their crack down and heightened regulator scrutiny, according to internal memos.
In one note, crafting talking points for Operation Choke Point to brief Mr. Holder with, Justice officials acknowledged: “the regulators are also taking action, and reinforcing their longstanding guidance on what are ‘high-risk merchants’ and what due diligence banks should do on such merchants.”
Another talking point included: “We have also learned from industry sources that many banks are taking note of our activity and that of the regulators and doing what they should have done all along — due diligence to know their customers. Some are also exiting “high-risk” lines of business.”
Mr. Holder was the intended recipient of the aforementioned talking points, according to internal Justice communications — meaning he was fully aware legitimate businesses were being dropped as a result of the operation.
The National Shooting Sports Foundation, a trade association for the firearms industry, issued a statement Thursday stating that many of its members have had their banking relationships terminated by lending institutions as a result of Operation Choke Point.
“We respect the right of financial institutions to make business decisions based on objective criteria. It is unacceptable, however, to discriminate against businesses simply because they are engaged in the lawful commerce of firearms, an activity protected by the Second Amendment,” the organization said in a statement. The organization has met with the House Financial Services Committee and members of the Oversight and Government Reform Committees to discuss the anti-fraud operation.
For the past year, the Department of Justice, through Operation Choke Point, has initiated a wide-range investigation of banks and payment processors because of who they do business with. If banks took on what the Federal Deposit Insurance Corporation identified, in an internal memo, as “high risk” industries as clients, then those banks were more susceptible to a government investigation.
As of last year, the Department had issued more than 50 subpoenas to banks and payment processors, the report said. The risk of an investigation, coupled with the due-diligence of taking on what the administration deems as high-risk clients, has deterred many banks from providing services to these industries, said Richard Riese, a senior vice president at the American Bankers Association.
In an internal memorandum at the Department of Justice about the goals of Operation Choke Point, a senior official proposed the department identify 10 suspect banks within 150 days to jump-start the operation.
Read more: Operation Choke Point targets businesses administration doesn
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