On Thursday, a bi-partisan majority of the U.S. House of Representatives passed H.R. 766, the ‘‘Financial Institution Customer Protection Act of 2015,” sponsored by Rep. Blaine Luetkemeyer (R-MO). As we reported last year, this bill targets the abuses of Operation Choke Point (OCP), an Obama administration “enforcement” program that lumped together legal and illegal businesses into a “high risk” category and threatened the banks with intense regulatory scrutiny. The goal of OCP was to deter the banks from forming or continuing relationships with the targeted industries, thereby driving them out of business. Included on this list were firearm and ammunition sellers, many of whom found themselves struggling to find or keep banking relationships as a result of the program.
Rep. Luetkemeyer’s legislation would institute numerous reforms to bring more transparency and accountability to federal oversight of banks, all aimed at preventing the sort of unchecked enforcement discretion and twisting of legislative language at the heart of OCP.
For example, the bill would require regulators that suggest or order a bank to terminate a customer’s account to put the directive in writing, with reference to any specific laws or regulations the enforcement agency believed were being violated. Moreover, no such reason could be based solely on “reputational risk,” the supposed basis for including firearm and ammunition businesses within the scope of OCP’s “high risk” target list.
Regulating agencies would also have to submit annual reports to Congress documenting any such requests or orders. Finally, the Act would make important amendments to the Financial Institutions Reform, Recovery, and Enforcement Act of 1989, which agencies have cited as authorization for OCP, to clarify the law’s scope so as to conclusively preempt this dubious justification.
When he reintroduced the bill last year, Rep. Luetkemeyer published excerpts of a FDIC whistleblower’s letter, which help substantiate the illegitimate ends of OCP. The individual wrote:
I am an employee of the Federal Deposit Insurance Corporation (FDIC). I was proud of my job and the FDIC’s mission before Operation Choke Point. During the past two years, however, we have been told to examine banks much more harshly, if they deal with a class of customers prohibited by Choke Point.
Predictability, the White House is already threatening to veto the legislation if it reaches the president’s desk.
