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October 12, 2018 | Press Releases
Newly-unsealed court documents released today show evidence of the federal government’s illegal Operation Choke Point program in which top government officials and federal agencies pressured banks to cut all ties with lawful businesses. More than 100 records expose depositions and damaging emails of government officials, most notably at the Federal Deposit Insurance Corporation (FDIC), who executed a secretive campaign against lawful businesses it disfavored while ignoring due process and subverting the legal and regulatory process. This illegal campaign included threats from senior government officials that agency staff would be fired and bank officials could be subject to criminal prosecution. The key findings disclosed in the filing indicate that this campaign was instituted at the very highest levels of the FDIC and has been ruthlessly and enthusiastically implemented in the field:
“These documents reveal a shocking abuse of power and conspiracy to single out an industry and bring it to its knees, something far away from a regulatory agency’s requirement to proceed according to the rule of law and due process,” said Dennis Shaul, CEO of the Community Financial Services Association of America (CFSA). “Despite hearing statements to the contrary from government officials for years, these records prove that there was an intentional and targeted campaign to carry out an illegal policy. If personal preference and subjectivity is the guide for regulation, an awful precedent is set and there is no end to the interests that can be targeted – pro-choice groups, environmental causes, religious groups and many more.”
The never-before-seen documents were released as part of the Plaintiffs’ Motion for Summary Judgment in the lawsuit Advance America et al. v. Federal Deposit Insurance Corp. et al. The documents show that top leadership at the FDIC held strong personal biases and began a ruthless targeted campaign against the small-dollar lending industry. As the evidence recounted above shows, these biases permeated the agency and influenced its supervisory approach.
“More than four years ago, Advance America and its industry partners took the extreme and costly step of suing federal regulators for attempting to cut off our access to the U.S. banking system,” said Patrick O’Shaughnessy, President and CEO of Advance America and Chair of the CFSA Board of Directors. “We expected to find a concerted effort to pressure banks from doing business with our industry, but discovered the nearly unthinkable. While claiming – publicly, under oath – to be combatting illegal activity, high-ranking government bureaucrats deployed a clandestine crusade to eliminate our regulated and legal service. The campaign revealed that personal bias had motivated scorn for our industry, contempt for our millions of customers, blatant disregard for due process, and an unprecedented weaponization of government.”
The plaintiffs in this case are seeking an end to this type of improper regulatory pressure—which is causing bank terminations to continue to this day—as well as an opportunity to restore the banking relationships that were previously terminated as a result of Operation Choke Point.
Operation Choke Point is an illegal government campaign that employs strong-arm tactics to force banks to end their legal business relationships with smaller, licensed companies that were disfavored by bureaucrats from the previous administration. These industries include local small businesses like fireworks and firearms companies, home-based charities, and small-dollar lenders. In June 2014, CFSA and its largest member companies, Advance America and Check Into Cash, filed a lawsuit against the federal government seeking to end Operation Choke Point and the government’s improper regulatory overreach.
The defendants in the lawsuit include the FDIC and the Office of the Comptroller of the Currency (OCC) – the agencies that, in a coordinated fashion, sought to deprive legal, licensed business of access to banking services.