FDIC's McWilliams to hire outside counsel over 'Choke Point' concerns
WASHINGTON — Federal Deposit Insurance Corp. Chairman Jelena McWilliams said the agency has hired outside legal counsel and is calling for additional training for examiners following concerns from Republican members of Congress that agency staffers are discouraging banks from doing business with certain industries.
In a letter to Rep. Blaine Luetkemeyer, R-Mo., who currently chairs a House subcommittee on financial institutions, McWilliams said she was “troubled” that certain FDIC employees were operating in a manner consistent with an overturned Obama-era Justice Department policy, known as Operation Choke Point.”
The policy led to investigations into banks that did business with firms that were disfavored by the administration but were legal, including firearms firms, pawn shops and payday lenders.
“To ensure that the FDIC's commitment to integrity remains unequivocally clear, I am asking an outside law firm to review the prior actions taken by the FDIC in this matter so that I can better ascertain the effectiveness of our response,” McWilliams wrote in a Nov. 15 letter.
“Regulatory threats, undue pressure, coercion, and intimidation designed to restrict access to financial services for lawful businesses have no place at this agency,” McWilliams added.
McWilliams also said that she has directed additional training for the FDIC’s examination workforce to ensure that they “respect the rule of the law.”
The letter comes as several Republicans in Congress have recently raised concerns over examiners’ continuing to enforce Operation Choke Point.
Luetkemeyer called on McWilliams and Comptroller of the Currency Joseph Otting to investigate a matter in which a former FDIC regional director instructed staff to use all available means, including verbal communications, to discourage banks from providing assistance to payday lenders.
Senate Banking Committee Chairman Mike Crapo, R-Idaho, wrote a separate letter this month to McWilliams, signed by all of the Republicans on the panel, urging the agency to ensure that banks aren’t cutting off lawful businesses simply because they were viewed as unfavorable by certain administrations.
In a separate letter to Luetkemeyer dated Nov. 19, Otting reiterated that the OCC “was never a part of Operation Choke Point.”
“To be clear, the OCC has no policy or program that targets any business operating within state and federal law, and I am committed to ensuring that it does not have such policy or program in the future,” Otting said.
Luetkemeyer applauded the efforts by McWilliams and Otting.
"I’m happy see the regulators’ willingness to ensure regulation is never again borne of personal biases or political motivations," Luetkemeyer said in a statement.