{"id":45547,"date":"2018-11-02T03:00:14","date_gmt":"2018-11-02T07:00:14","guid":{"rendered":"https:\/\/quotulatiousness.ca\/blog\/?p=45547"},"modified":"2018-11-01T10:11:04","modified_gmt":"2018-11-01T14:11:04","slug":"operation-choke-point","status":"publish","type":"post","link":"https:\/\/quotulatiousness.ca\/blog\/2018\/11\/02\/operation-choke-point\/","title":{"rendered":"Operation Choke Point"},"content":{"rendered":"

In Forbes<\/em>, John Berlau<\/a> details how expansive regulatory powers and vindictive bureaucrats make doing business in the United States less “free enterprise” and more “shame if something were to happen to it”:<\/p>\n

Every Halloween, there exists the temptation for bloggers, pundits, and commentators to describe routine events in the news with adjectives like \u201cscary\u201d and \u201cfrightening.\u201d Sensitive to sounding clich\u00e9d or inflammatory, I try usually to avoid using such terminology in my descriptions of the policy process.<\/p>\n

Yet after reading through new documents introduced into a lawsuit stemming from the Obama administration\u2019s \u201cOperation Choke Point,\u201d I find that \u201cscary\u201d and \u201cfrightening\u201d actually fit. These documents show that powerful bank regulatory agencies engaged in an effort of intimidation and threats to put legal industries they dislike out of business by denying them access to the banking system.<\/p>\n

While I am often outraged about things the government does, now I am truly scared and frightened about the ability of government bureaucrats to shut down arbitrarily whole classes of businesses they deem to be \u201cpolitically incorrect.\u201d As one who champions the FinTech sector and the benefits it can bring, I also worry that such powers may be uses to shut down innovative new industries, such as cryptocurrency, that carry some perceived or real risks.<\/p>\n

Choke Point was a multi-agency operation in which several entities engaged in a campaign of threats and intimidation to get the banks that they regulate cut off financial services \u2013 from providing credit to maintaining deposit accounts — to certain industries regulators deemed harmful a bank\u2019s \u201creputation management.\u201d The newly released documents \u2013 introduced in two court filings in a lawsuit against Choke Point — show that the genesis of Choke Point actually predated Barack Obama\u2019s presidency, and began when President George W. Bush was in power.<\/p>\n

[…]<\/p>\n

When the Obama administration came into power, the FDIC would expand the definition of \u201creputation risk\u201d even further, and other federal agencies, bureaus, and departments would soon jump on the proverbial bandwagon. Much of Operation Choke point would again be accomplished by \u201cguidance documents,\u201d which my Competitive Enterprise Institute colleague Wayne Crews refers to as \u201cregulatory dark matter,\u201d since they have legal force but allow regulators to bypass the sunlight of the notice-and-comment process of a formal rule.<\/p>\n

In 2011, an FDIC guidance document featured a chart of business categories engaged in what it called \u201chigh-risk activity.\u201d These included \u201cdating services,\u201d \u201cescort services,\u201d \u201cdrug paraphernalia,\u201d \u201cPonzi schemes,\u201d \u201cracist materials,\u201d \u201ccoin dealers,\u201d \u201cfirearm sales,\u201d and \u201cpayday loans.\u201d The FDIC would post this and similar lists in other guidance documents and on its web site.<\/p>\n

A staff report of the House Government Reform and Oversight Committee puzzled over many of these categories. \u201cFDIC provided no explanation or warrant for the designation of particular merchants as \u2018high-risk,\u2019\u201d the report observed. \u201cFurthermore, there is no explanation for the implicit equation of legitimate activities such as coin dealers and firearm sales with such patently illegal or offensive activities as Ponzi schemes, racist materials, and drug paraphernalia.\u201d<\/p><\/blockquote>\n","protected":false},"excerpt":{"rendered":"

In Forbes, John Berlau details how expansive regulatory powers and vindictive bureaucrats make doing business in the United States less “free enterprise” and more “shame if something were to happen to it”: Every Halloween, there exists the temptation for bloggers, pundits, and commentators to describe routine events in the news with adjectives like \u201cscary\u201d and […]<\/p>\n","protected":false},"author":1,"featured_media":35193,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"jetpack_post_was_ever_published":false,"_jetpack_newsletter_access":"","_jetpack_dont_email_post_to_subs":false,"_jetpack_newsletter_tier_id":0,"_jetpack_memberships_contains_paywalled_content":false,"_jetpack_memberships_contains_paid_content":false,"footnotes":""},"categories":[8,831,84,13],"tags":[436,351,661],"class_list":["post-45547","post","type-post","status-publish","format-standard","hentry","category-bureaucracy","category-business","category-government","category-usa","tag-banking","tag-politicalcorrectness","tag-regulation"],"jetpack_featured_media_url":"https:\/\/quotulatiousness.ca\/blog\/wp-content\/uploads\/2016\/06\/favicon.png","jetpack_shortlink":"https:\/\/wp.me\/p2hpV6-bQD","jetpack_sharing_enabled":true,"_links":{"self":[{"href":"https:\/\/quotulatiousness.ca\/blog\/wp-json\/wp\/v2\/posts\/45547","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/quotulatiousness.ca\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/quotulatiousness.ca\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/quotulatiousness.ca\/blog\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/quotulatiousness.ca\/blog\/wp-json\/wp\/v2\/comments?post=45547"}],"version-history":[{"count":1,"href":"https:\/\/quotulatiousness.ca\/blog\/wp-json\/wp\/v2\/posts\/45547\/revisions"}],"predecessor-version":[{"id":45548,"href":"https:\/\/quotulatiousness.ca\/blog\/wp-json\/wp\/v2\/posts\/45547\/revisions\/45548"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/quotulatiousness.ca\/blog\/wp-json\/wp\/v2\/media\/35193"}],"wp:attachment":[{"href":"https:\/\/quotulatiousness.ca\/blog\/wp-json\/wp\/v2\/media?parent=45547"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/quotulatiousness.ca\/blog\/wp-json\/wp\/v2\/categories?post=45547"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/quotulatiousness.ca\/blog\/wp-json\/wp\/v2\/tags?post=45547"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}