It’s time for revisiting Operation Choke Point. (To review, click here, click here, and click here.) This was the government program that tried to deny banking services to 30 different business categories because those businesses allegedly would be risky for banks. The categories included
- Ammunition and guns (second amendment anyone?)
- Pornography and racist materials (there goes the first amendment, too)
- Coin dealers, tobacco sales, and surveillance equipment (???)
- Government grants (proof that not a single person in Washington DC still has a sense of irony)
Daily Signal reporter Kelsey Harkness has been on this story from the beginning. In her latest article she cites an op-ed in the American Banker by Michael J. Resnick:
“Unfortunately, as the investigations continue, so too have one of the unintended but collateral consequences of such vigilance: mass de-risking,” wrote Michael J. Bresnick, who previously served as executive director of Obama’s Financial Fraud Enforcement Task Force, under which Operation Choke Point was created. “Members of the industry have raised their hands in frustration and simply avoided lines of business typically associated with higher risk. This reaction to [the Justice Department’s] enforcement initiative, and similar matters brought by the Federal Trade Commission and the Consumer Financial Protection Bureau, is certainly understandable.”
This is beyond naïve. It is self-serving tripe. Unintended consequences? Anyone with half a brain (including both Ms. Harkness and me) predicted exactly this outcome. The whole point of Operation Choke Point was to prevent legal businesses from using banking services, thereby inhibiting their expansion. In some cases, businesses simply folded. More from Ms. Harkness:
After reading Bresnick’s article in American Banker, Brian J. Wise, president of U.S. Consumer Coalition, which has raised public awareness about Operation Choke Point, called the former Obama administration official “the ultimate capitalist.”
“Michael Bresnick is the ultimate capitalist,” Wise said. “He created Operation Choke Point at the expense of small businesses and their consumers. Now he is making money off of trying to help those businesses deal with the program he created. The losers in this game of regulatory cronyism are America’s consumers.”
In Bresnick’s bio, he states that he “previously served as executive director of President Obama’s Financial Fraud Enforcement Task Force, under which Operation Choke Point was created.” Bresnick now serves as chair of the financial services investigations and enforcement practice at Venable LLP.
According to Bresnick’s article, the Justice Department is still carrying out Operation Choke Point. “Last month the prosecutors in [Justice Department’s] Consumer Protection Branch, who led the investigations into [Operation Choke Point’s] previous targets, filed a 39-count criminal indictment in Nevada of Gareth Long, owner and operator of the third-party payment processor V Internet Corp, LLC,” he wrote.
Operation Choke Point was illegal and, most likely, unconstitutional. But many of the targeted businesses were small and unable to file a lawsuit. While I usually oppose class-action cases, this program is crying out for a few good attorneys.