It was named Operation Choke Point, an effort of the Obama era primarily targeted at politically controversial but perfectly legal corporations that were not appreciated by liberals.
It was “an egregious affront to the rule of law” to some observers, such as Forbes contributor Norbert Michel. Little surprise, then, that the Biden administration repealed a rule designed to prevent it.
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Operation Choke Point was planned for the unfamiliar as a means of choking off gun dealers and payday lenders by instructions from the Federal Deposit Insurance Corporation that amounted to strong-arm tactics.
Former President Donald Trump halted the operation, which had started in 2013, during his time in office. In January, it released the “Fair Access Rule,” as the Trump administration was on its way out, which was intended to avoid any such round of intimidation.
The rule notes that “banks should conduct risk assessments of individual customers when providing access to services, capital, and credit, rather than making broad-based decisions affecting entire categories or classes of customers.”
“Kelsey Bolar, policy analyst at the Independent Women’s Forum, a conservative group, wrote in a piece published in The Federalist on Friday that “[u]nder Operation Choke Point, federal regulators ordered banks to do the reverse, actively discriminate against whole sectors that the Obama administration considered unacceptable.
“Weaponizing the power of the Federal Deposit Insurance Corp. banking regulators and the Office of the Comptroller of the Currency, the Obama administration found that it could block the banking system from entire sectors that it did not like. This made it difficult for politically unfavored companies such as gun sellers and short-term lenders to function, if not impossible, she wrote.
“In essence, by taking advantage of the power of federal banking regulators to intimidate banks from providing their services to these sectors, the administration has choked off their access to the financial system, leaving them to pay more for essential banking services, or to be unable to use a bank at all.”
Introducing the Equal Access Rule in January, acting Currency Comptroller Brian P. Brooks said it was important to provide access to banking services for legal companies and organizations.
“In a statement, Brooks said, “If a large bank wishes to cut off access to charities or even embassies serving dangerous areas of the world or companies operating legal enterprises in the United States that promote local employment and the national economy, they need to demonstrate their job and the legitimate business reasons for doing so.
As comptrollers and staff in previous administrations have made clear in speeches, guidelines, and testimony, without performing individual risk assessments, banks do not terminate services to entire groups of customers. Decisions based solely on factual or categorical statements of risk without actual review are inconsistent with the core principles of prudent risk management.
Although a late January statement from the Office of Comptroller of the Currency of the Biden administration noted “[t]he long-standing OCC supervisory guidance stating that banks should avoid termination of wide categories of customers without assessing individual customer risk remains in effect,” the office also stated that it was pausing the Equal Access Rule of the Trump administration.
‘Pausing the publication of the rule in the Federal Register would allow the next confirmed Comptroller of the Currency, as part of an orderly transition, to review the final rule and the public feedback received by the OCC,’ read the notice of Jan. 28.
This may seem harmless enough on one hand. Payday creditors, once the moral outrage of the week during Obama’s second presidential term, are not yet on the policy radar of the administration, at least not publicly.
However, one thing that makes this pause sound a little more ominous is the new attention of the Biden administration on gun control.