Operation Choke Point an abuse of power
Americans have discovered that even though President Barack Obama vowed to have “the most transparent administration in history,” that pledge has fallen short.
As scandal has piled upon scandal, Americans have gotten a decidedly different picture of the Obama administration — that the Obama administration will stop at nothing (certainly not the Constitution) to do what it wants to do. The latest example of the blatant disregard for transparency and the Constitution is the Department of Justice’s Operation Choke Point.
Created to prevent fraud, Operation Choke Point has turned into a political weapon.
In a joint effort with banking regulators, the DOJ, led by Attorney General Eric Holder, has begun systematically targeting businesses (like payday loans, firearm and ammunition sales, home-based charities and pornography) that the administration apparently finds distasteful through Operation Choke Point. The fact that the companies targeted by the DOJ haven’t violated any laws is unsettling enough, but it’s the way the feds have gone after them that raises the eyebrow of anybody who knows the Bill of Rights.
Rather than follow conventional methods — investigating, obtaining a court-supplied search warrant, charging suspects with a particular crime, trying them and finally convicting them, the always-innovative feds skip all the busy work and just bully banks into closing bank accounts of “high risk persons.” And as North Carolina’s Four Oaks Bank found out, federal regulators will simply attack the banks themselves if they don’t play ball. Four Oaks was slapped with a $1.2 million fine for processing unlicensed payday loan transactions.
Darrell Issa, R-Calif., chairman of the House Oversight and Government Reform Committee, has criticized Operation Choke Point as a “secretive initiative” and a slippery slope. According to Issa, “If you empower the government to pick winners and losers within a lawful enterprise, there’s no place to stop.”
Once the Department of Justice strays beyond its rightful duties of prosecuting criminals into crusading against “shady” or “immoral” businesses, where does it end?
DOJ officials have responded to criticism by saying that the purpose of Choke Point is to weed out and prevent fraud to protect consumers. But as Norbert Michel of the Heritage Foundation points out, “fraud should be prosecuted, but they don’t have to use the banking system to shut out every single player in an industry to do that.”
Federal officials insist that Operation Choke Point is a legitimate program, but given the Obama administration’s history of inappropriately using federal resources to target and intimidate political opponents, it’s hard not to be just a little bit cynical. A sporting goods store in Massachusetts reports that after doing business with the same bank for 20 years, it was denied a loan, not because of bad credit or shaky financials, but because of its involvement in firearm sales. A person speaking for the bank responded all-too-clearly: “[We] evaluate each prospective lending relationship to ensure that we are operating within our risk appetite and only taking risks we can understand and manage.”
The chilling effect here is obvious: Banks that do business with the wrong kinds of people (not illegal, just, you know, wrong, as determined by Washington) are heavily fined or shut down. Therefore, banks pre-emptively avoid the risk and choke out these wicked people themselves, just to stay on the snoopers’ good side. The Department of Justice can avoid the hassle of proving any sort of illegality, and can claim ignorance of what private companies do with their customers. But DOJ targets get cut down all the same. How neat and tidy.
The fundamental problem is that the Department of Justice, and indeed the entire executive branch, is tasked with a clear objective: to enforce the laws that the legislators have passed. Whether the folks who have been targeted by Operation Choke Point are legitimately bad guys or not is irrelevant, because unsavoriness isn’t illegal. Rather than arbitrarily and secretly frightening banks into strangling political enemies for it, the Department of Justice should return to doing its job, and to using only the tools the Constitution permits.
David Williams is president of the Taxpayers Protection Alliance.