Payday Lenders – Satisfied Trump Administration Won’t Go Too Hard On Them – Drop Lawsuit Against Operation Choke Point
Washington D.C. — Politico reported on May 22 : “Payday lenders have reached a tentative settlement with the FDIC and the Office of the Comptroller of the Currency to end their years long legal battle over whether bank regulators acted inappropriately in connection with an Obama-era program known as “Operation Choke Point.” […] Operation Choke Point, officially described as an effort to cut off the banking system from wrongdoing by merchants, was apparently ended under President Donald Trump.”
In response, Allied Progress Director Derek Martin made the following statement:
“Operation Choke Point was designed to investigate unlawful behavior based on evidence consumers were being defrauded. The fact that the payday lending industry spent so much time and energy opposing such an idea should speak volumes about how they operate and what kind of behavior they engage in. The only reason they’re settling this suit now is they know Donald Trump has their backs after they poured $2.5 million into his campaign and inauguration activities.”
BACKGROUND:
- Operation Choke Point investigated specific unlawful conduct based on evidence that consumers are being defrauded. “Stuart Delery, assistant attorney general for the Justice Department’s civil division, told lawmakers that the department’s ‘policy is to investigate specific unlawful conduct based on evidence that consumers are being defrauded, not to target whole industries or businesses acting lawfully.'” [Danielle Douglas, “Republicans to Justice Dept.: Stop targeting legal businesses in ‘Operation Choke Point,'” The Washington Post, 07/18/14]
- Operation Choke Point Simply Heightened Scrutiny On Banks That Failed To Raise Concerns About “Questionable Transactions On Their Networks.” It Was Already The Banks’ Responsibility To Flag These Transactions. “The idea behind Operation Choke Point, initiated in 2013, was to prevent consumer fraud by limiting access to the financial system. Any transaction that requires a deduction from a bank account has to go through what’s called the Automatic Clearing House. Only banks with access to the payment system can facilitate those transactions. Banks, of course, have certain responsibilities to flag suspicious activity, under the Bank Secrecy Act and anti-money laundering statutes. Banks must identify that their customer is legitimate, to ensure that they’re not implicated in a fraud scheme. So Operation Choke Point heightened scrutiny on banks who failed to raise concerns about questionable transactions on their networks. In presentations to banks, regulators and law enforcement highlighted business transactions with high rates of customer disputes. It was already the bank’s responsibility to report these; DOJ was just warning banks to be vigilant.” [David Dayen, “MORE TRUMP POPULISM: DOJ SHUTS DOWN AN OPERATION THAT WAS SUCCESSFULLY COMBATING CONSUMER FRAUD,” The Intercept, 08/18/17]
- In 2017, the Trump Justice Department “committed to ending” Operation Choke Point.“The Justice Department has committed to ending a controversial Obama-era program that discourages banks from doing business with a range of companies, frompayday lenders to gun retailers.” [Victoria Guida, “Justice Department to end Obama-era ‘Operation Choke Point,’” Politico, 08/17/17]
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