Senators ask AG Sessions to halt Choke Point

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WASHINGTON — Senators sent a letter to Attorney General Jeff Sessions last week asking him to issue a statement saying that Operation Choke Point is no longer in effect.

The letter, from Sen. Thom Tillis, R-N.C., and Senate Banking Committee Chairman Mike Crapo, R-Idaho, said that, despite some assurances that the Department of Justice crackdown on banks' third-party relationships was ending, it is still having an impact.

“While many would claim that” Operation Choke Point “has ceased to operate, this does not appear to be the case as we continue to receive complaints that indicate that the program is in effect,” they said in the letter, dated July 6.

“To remedy this, we request that DOJ review all options available to ensure lawful businesses are able to continue to operate without fear of significant financial consequences, which should include taking the additional step of issuing a Statement of Enforcement Policy that Operation Choke Point is no longer in effect."

The letter was sent on the same day that a U.S. District Court judge for D.C. allowed a lawsuit by payday lenders against federal regulators to advance to the discovery stage, where more evidence will be collected.

Operation Choke Point was a 2013 Justice Department initiative that investigated links between banks and merchants believed to be at higher risk of committing consumer fraud. The Justice Department keyed on industries that the Federal Deposit Insurance Corp. had flagged as "high-risk" on a 2011 list. The FDIC later rescinded the list, which had been intended to strengthen banks' risk management and due diligence processes.

Payday lenders, third-party payment processors and other industries have blamed the Justice Department initiative — along with the FDIC, Office of the Comptroller of the Currency and Federal Reserve Board — for their losing access to services from banks that cut ties after facing additional regulatory scrutiny.

“We are convinced that banks still believe that DOJ negatively views providing financial services to members of certain lawful industries,” Tillis and Crapo said.

The two senators are not the only lawmakers concerned about continued Choke Point fallout. Rep. Blaine Luetkemeyer, R-Mo., maintains a list of businesses that claim they have wrongly lost bank accounts because of the Justice Department program. He has introduced legislation that would prevent examiners from recommending banks terminate certain accounts.

“There is no place for a political agenda in oversight of the banking system," Tillis and Crapo wrote, "and Operation Choke Point must end once and for all.”

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AML De-risking Fraud Payday lending Mike Crapo Jeff Sessions FDIC DoJ
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