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WASHINGTON, D.C. – Along with producing a flurry of executive orders, memos, and proclamations, Joe Biden has also paused a Trump-era rule that promised to protect certain businesses from discriminatory stifling of banking transactions.
This Fair Access Rule, set forth at the end of Trump’s presidency and intended to take effect in April of 2021, stipulates that banks may not deny banking access to entire categories or classes of customers, such as customers involved in the firearms industry.
The Fair Access Rule had put a final nail in the coffin of a little-publicized Obama program known as Operation Choke Point – or so it seemed.
Biden Administration Prepares Way For Banks To Refuse Service To Democrats’ Enemieshttps://t.co/jqMNy145g3
— The Federalist (@FDRLST) February 19, 2021
Established in 2013, Operation Choke Point was an effort by the Obama administration to exclude certain industries from the banking system, ostensibly to address issues of consumer fraud by protecting bank customers from “high risk” business practices.
According to a screenshot saved by the Daily Signal, businesses that the FDIC deemed an elevated risk included not only illegal or questionable prospects such as Ponzi schemes and pornography, but also business activities hated by the left, such as ammunition and firearms sales.
Under Operation Choke Point, the Department of Justice began issuing subpoenas to banks and financial payment processors.
Banks responded to the pressure of the possibility of federal investigations by reviewing their customers and ceasing transactions with what the DOJ and FDIC considered unfavored industries.
Such pressure, according to Forbes, led to the likes of investment banking leader J.P. Morgan severing ties with thousands of customers.
Business owners, including pawn shop owners and firearms sellers, found themselves cut off from their banks and lending institutions, often with no explanation, and also with no recourse.
Gun stores “had credit lines limited or cut, and their assets frozen.”
Fortunately, in 2017, under President Trump, Operation Choke Point was ended.
Calling the program “misguided,” Assistant Attorney General Stephen Boyd noted that:
“law abiding businesses should not be targeted simply for operating in an industry that a particular administration might disfavor.
“Enforcement decisions should always be made based on the facts and applicable law.”
Introduced by Obama in 2013 and later was shut down in 2017, the operation Choke Point had allowed DoJ to use FDIC to lean on banks to close the accounts of businesses they didn't like.
It will perhaps become operational once again under Biden. pic.twitter.com/9UVH44xvoU
— Funkhouser (@natoshisakamato) February 11, 2021
He added:
“The Department [of Justice] is committed to bringing enforcement actions only where warranted by the facts and the applicable law, without regard to political preferences….
“We reiterate that the Department will not discourage the provision of financial services to lawful industries, including businesses engaged in short-term lending and firearms-related activities.”
Boyd also promised:
“All of the Department’s bank investigations conducted as a part of Operation Chokepoint are now over, the initiative is no longer in effect, and it will not be undertaken again.”
This promise was further bolstered by the aforementioned Trump-era Fair Access Rule.
The rule applies to banks with greater than $100 billion in assets, and requires those banks to:
“make those products and services they choose to offer available to all customers in the communities they serve, based on consideration of quantitative, impartial, risk-based standards established by the bank.”
Acting Comptroller of the Currency Brian P. Brooks stated with reference to the rule:
“As Comptrollers and staff in previous administrations have made clear in speeches, guidance, and testimony, banks should not terminate services to entire categories of customers without conducting individual risk assessments.
“It is inconsistent with basic principles of prudent risk management to make decisions based solely on conclusory or categorical assertions of risk without actual analysis.”
Biden set to revive ‘Operation Choke Point’ program accused of punishing disfavored businesses https://t.co/F4aVFTjYqk pic.twitter.com/61hNKynwEc
— Conservative News (@BIZPACReview) February 19, 2021
The Fair Access Rule received praise from those involved in the firearms industry.
National Shooting Sports Foundation senior vice president and general counsel told the Washington Times:
“This rule will ensure large financial institutions that are supported by taxpayer-funded resources like insurances must provide fair and equal access to services based on their objective financial creditworthiness, and not based on ‘woke’ political considerations.”
Senator John Barrasso (R-WY) noted that the rule would stop “left-wing abuses of power and discrimination against lawful businesses.”
The Senator added:
“The radical left wants to impose purity tests on bank lending to legal, constitutional activities that employ our friends and neighbors.”
He continued:
“That’s wrong, and that’s un-American.”
Unfortunately, as expected, under Joe Biden, the rule’s protection for legitimate businesses has been removed.
On January 28, 2021, according to a press release by the Office of the Comptroller of the Currency:
“The Office of the Comptroller of the Currency (OCC) today announced it has paused publication of its rule to ensure large banks provide all customers fair access to their services.”
The OCC has allowed the “supervisory guidance” of not cutting off broad swaths of customers to stand, but not the rule itself.
The press release goes on to say:
“The agency proposed the rule in November 2020 to codify more than a decade of OCC guidance stating that banks should conduct risk assessments of individual customers, rather than make broad-based decisions affecting whole categories or classes of customers, when providing access to services, capital, and credit.
Operation Choke Point is coming back… https://t.co/uB6CB8wCLb
— Nick Short (@PoliticalShort) February 19, 2021
It continues:
“Pausing publication of the rule in the Federal Register will allow the next confirmed Comptroller of the Currency to review the final rule and the public comments the OCC received, as part of an orderly transition.”
In this era of cancel culture, it is more than reasonable to expect that under Biden, the left will applaud a resumption of politically-based choking off of banking relationships via a resurrection of Operation Choke Point.
Given the pausing of the Trump-era protective Fair Access Rule, the country has now started down a path to that resurrection.
