In March 2013, the Department of Justice revealed that it was working with banking regulators to prevent fraudsters from accessing consumer bank accounts by choking off their access to electronic payments. DOJ calls the program "Operation Choke Point." See prior blog posts here and here.
The Operation has come under attack from Republicans in Congress who accuse DOJ targeting disfavored businesses, such as credit repair services, payday lenders, and gun dealers. Yesterday, DOJ officials testified before a House Financial Service’s Subcommittee on Oversight and Investigations to explain and defend the program. While one House Member declared that the program “represented an attack on businesses engaged in lawful activity,” DOJ official countered: “Our policy is to investigate specific conduct, based on evidence that consumers are being defrauded—not to target whole industries or businesses acting lawfully, and to follow the facts wherever they lead us, in accordance with the law, regardless of the type of business involved. We think this endeavor demonstrates the importance of holding financial institutions accountable when they participate in fraudulent activities.”
The written testimony of the four witnesses—from DOJ, the Federal Reserve, the Federal Deposit Insurance Corporation, and the Office of the Comptroller of the Currency—is available on the Committee’s website, along with a webcast of the hearing. A related hearing held by the same House Committee later that day included 6 witnesses for banking institutions and 2 for consumer advocacy groups.
News coverage of the hearing and of operation Choke Point reflects vastly different perspectives. For example, the Huffington Post article on the hearing is entitled “Darrell Issa's Latest Circus Has Lawmakers Shocked That DOJ Fights Fraud.” In contrast, a blog post on The Hill is entitled “Congress needs to choke off Operation Choke Point.”
