Justice Department Ends Obama-Era Operation Choke Point

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The move gives a big victory to Republican lawmakers who have accused the initiative of harming legitimate businesses. | AP Photo

The Justice Department is committed to ending a controversial Obama-era program that discourages banks from doing business with a variety of companies, from payday lenders to gun retailers.

The move gives a big victory to Republican lawmakers who accused the initiative – dubbed “Operation Choke Point” – of harming legitimate businesses.

In a letter to House Judicial Speaker Bob Goodlatte (R-Va.), Deputy Attorney General Stephen Boyd called the program a “misguided initiative”.

“We share your view that law-abiding companies should not be targeted just because they operate in an industry that a particular administration might disadvantage,” said the letter, obtained by the progressive activist group Allied Progress and later provided to POLITICO by the Goodlatte office. “Enforcement decisions should always be made on the basis of facts and applicable law.

“We reiterate that the ministry will not discourage the provision of financial services to legal industries, including businesses engaged in short-term lending and gun-related activities,” he adds. An almost identical letter was sent to Sens. Thom Tillis (RN.C.) and Mike Crapo (R-Idaho).

The Justice Department confirmed the letter to be genuine but declined to comment further.

Under President Barack Obama, the ministry said the effort was aimed at eliminating bank and payment processor fraud and cutting the banking system off from merchant wrongdoing.

Karl Frisch, executive director of Allied Progress, called the letter a “massive gift to predatory payday lenders and other shady financial con artists.”

“Operation Choke Point has been incredibly effective in suppressing the flow of money to fraudulent merchants who break the law and target vulnerable consumers,” Frisch said in a statement.

But Republicans in Congress argued that the program was preventing banks from serving legitimate businesses and was trying to roll back officials using legislation and investigative powers.

Goodlatte and House Financial Services President Jeb Hensarling (R-Texas), along with Reps Tom Marino (R-Pa.), Blaine Luetkemeyer (R-Mo.) And Darrell Issa (R-Calif.) Congratulated the department in a statement.

“We applaud Trump’s Justice Department for decisively ending Operation Choke Point,” they said. “The Obama administration created this misguided agenda to stifle legitimate businesses it was ideologically opposed to by intimidating financial institutions into denying banking services to those businesses.”

Last year, payday lenders sued banking regulators over what they claimed was an effort to force banks to sever ties with businesses. A federal judge in charge of the case had approved a discovery schedule. Regulators have denied any discrimination against certain types of businesses.

Last month, Republicans in Congress sent letters to the DOJ urging it to end the program, saying they were hearing complaints. They demanded an official statement saying Operation Choke Point was no longer in effect.

Frisch disagrees with the lawmakers’ point of view. “The end of this program will make it easier for financial predators and other unscrupulous industries to obtain the resources they need to carry out their deceptive and often illegal business practices,” he said.

Zachary Warmbrodt contributed to this report.

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