That document makes it clear that it was the
DOJ and UPPER LEADERSHIP of the FDIC that targeted legal business involving the categories they mentioned. It clearly states that the DOJ & Eric Holder created "Operation Choke Point" and recruited the FDIC as a "partner" with the specific purpose of attacking 2nd Amendment rights to own and use firearms. Businesses selling arms and ammunition were the main targets and the other categories were added as smoke screens to hide their real intent. Only firearms involve a Constitutionally protected right.
A primary concern for the Committee is FDIC’s cooperation with the Department of Justice on Operation Choke Point. As described in the staff report of May 29, 2014, the Committee has serious concerns with the Department’s motivations, legal theories, and 52investigative approach. In their June 9, 2014 letter to FDIC Chairman Gruenberg, Chairman Issa and Subcommittee Chairman Jordan cited internal DOJ memoranda describing FDIC’s participation in the initiative. For example, DOJ’s initial proposal for Operation Choke Point described FDIC as a “partner agency” in the initiative. A later memorandum describes how FDIC even went as far as to volunteer two of its attorneys for the program.
Documents produced to the Committee by FDIC reveal the intensity of their collaboration with DOJ. Through March, April, and May 2013, senior officials within FDIC and DOJ held numerous meetings on how to combine efforts.55 Officials such as Michael Bresnick, Executive Director of the President’s Financial Fraud Enforcement Task Force and Joel Sweet, the DOJ Trial Attorney who initially proposed Operation Choke Point, frequently consulted with FDIC attorneys and senior officials. An FDIC Counsel within the Legal Division even went as far as to suggest a detail to DOJ as a Special Assistant United States Attorney. A fundamental purpose of this collaboration was to jointly formulate legal investigative theories.
The FDIC Legal Division’s operational practices further reflect joint ownership of the program. In summer 2013, an FDIC attorney instructed staff to create a “matter” – an official file within FDIC’s Advanced Legal Information System – specifically named “Operation Chokepoint.” This file allowed FDIC attorneys to review documents received in response to DOJ’s subpoenas. Furthermore, DOJ began allowing two FDIC attorneys direct access to a
confidential Justice Department system database named “Operation Choke Point.” Over the next several months, FDIC attorneys utilized this database to directly participate in the program.
The agencies’ collaboration was so intense, in fact, that DOJ attached FDIC’s list of “high-risk” merchants to the back of the subpoenas served upon banks and payment processors.
During a hearing before the Subcommittee on Regulatory Reform, Commercial and Antitrust law of the House Judiciary Committee, Representative Issa entered into the record one such subpoena provided by a whistleblower. The subpoena was identical to many of those that were served on over fifty financial institutions. In response to questions from Members of the Subcommittee, Assistant Attorney General Stuart Delery confirmed that DOJ stapled the FDIC guidance to the subpoenas issued under his signature.
The inclusion of the FDIC guidance in DOJ’s subpoenas effectively “weaponized” the high-risk merchants list. The implication was clear: banks were compelled to remove those clients from their portfolios, or risk a federal investigation by the Department of Justice.
Tellingly, one FDIC counsel even described Operation Choke Point as “our DOJ/Spike Lee Joint.”62 Although meant facetiously, such phrasing inherently reflects the agencies’ joint sense of ownership of the program.
If there was any doubt about the purpose of Operation Choke Point and its relation to firearms businesses:
VI. Conclusion
The practical impact of Operation Choke Point is incontrovertible: legal and legitimate businesses are being choked off from the financial system. Confidential briefing documents produced to the Committee reveal that senior DOJ officials informed the Attorney General himself that, as a consequence of Operation Choke Point, banks are “exiting” lines of business deemed “high-risk” by federal regulators.
The experience of firearms and ammunitions dealers – one of the most heavily regulated businesses in the United States – is a testament to the destructive and unacceptable impact of Operation Choke Point. TomKat Ammunition, a small business selling ammunition in the state of Maryland, holds a Type 06 Federal Firearms License from the Bureau of Alcohol, Tobacco, Firearms and Explosives, two Maryland State Licenses for Manufacturing and Dealing in Explosives, and a local business license.80 Notwithstanding the extraordinary complexity of this regulatory regime, over the past year TomKat Ammunition has been systemically denied access
to the financial system. One bank refused to provide payment processing services due to their “industry.” A large online payment processor informed TomKat that they “could not offer that service due to [their] line of work.” Another credit card processor stated it would no longer allow businesses to process gun or ammunition purchases.
Media accounts record similar experiences. In South Carolina, Inman Gun and Pawn’s longstanding checking accounts were terminated after the company was deemed a “prohibited business type.” In Wisconsin, Hawkins Guns LLC opened an account at a local credit union. The credit union terminated the account the very next day, informing the company that “they do not service companies that deal in guns.” In all three of these cases, the financial institutions and payment processors made no reference to the merchants’ creditworthiness, individual risk
profile, or due diligence findings. The sole basis for the terminations is their participation in an industry deemed “high risk” by federal regulators.
At a minimum, Operation Choke Point is little more than government-mandated de-risking. FDIC, in cooperation with the Justice Department, made sure banks understood – or in their own language, “got the message” – that maintaining relationships with certain disfavored business lines would incur enormous regulatory risk.86 The effect of this policy has been to deny countless legal and legitimate merchants access to the financial system and deprive them of their very ability to exist. Accordingly, Operation Choke Point violates the most fundamental principles of the rule of law and accountable, transparent government.
This kind of behavior by a Federal Agency, which is entirely politically motivated, was/is being used by the Obama administration to target 2nd Amendment businesses. As the document points out, if another administration gains control they could use the EXACT same procedure, with the added precedent that the previous administration used it with impunity, to target abortion clinics, or pot stores, or rap music.
