February 4, 2015
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Last month the U.S. Consumer Coalition revealed audio tapes proving what small business owners have been reporting for years: the Obama administration is throwing around threats of regulation to try to squeeze out of existence industries the bureaucrats don’t like.
As I wrote last month, in an Obama administration initiative known as “Operation Choke Point,” regulators from the CFPB, FDIC and the Justice Department collaborate to threaten banks, payment processors, and other financial institutions with regulatory consequences unless they cut off service to businesses in any of 30 industries on the administration’s target list.
That list, revealed in a 2011 document from the FDIC, includes gun and ammunition dealers, coin dealers, payday lenders, and sellers of “racist materials,” among other categories of perfectly legal (if not necessarily beloved) businesses. The result is that companies operating in these industries have found it increasingly difficult to do business, because the financial services they rely on for their day-to-day transactions are increasingly dropping them as clients.
Many of the banks and payment processors have told the people they’ve dropped that the decision didn’t reflect their behavior as clients. Instead, business owners have reported, banks and payment processors say the feds are forcing them to drop clients in targeted industries.
In one typical notice, obtained by the Washington Post, a banker wrote a business that “based on your performance, there’s no way we shouldn’t be a credit provider. Our only issue is, and it has always been, the space in which you operate. It is the scrutiny that you, and now that we, are under.”
The USCC tapes, provided by Wisconsin firearms dealer Mike Schuetz, were even more explicit about the administration’s abuse. As Breitbart reports:
Other audio recordings are equally chilling. “You wouldn’t believe the regulations we have and when they came in and nailed us on that [accounts] there were about a dozen of them crawling around the building,” a Heritage Credit Union official is heard on the tapes telling Schuetz.
This is pretty chilling behavior when you consider that these regulators are targeting small, legal businesses like Mike’s firearms dealership in Wisconsin.
And those bureaucrats evidently don’t appreciate their tactics being exposed so publicly. Following the disclosure of the tapes, the CFPB distributed a bulletin last week, telling financial services companies they aren’t allowed to talk to “third parties” about federal “supervisory” activities. The bulletin, which was obtained the by Daily Caller, states:
‘Confidential information’ means ‘confidential consumer complaint information, confidential investigative information, and confidential supervisory information, as well as any other CFPB information that may be exempt from disclosure under the Freedom of Information Act pursuant.
In other words, the feds are telling the banks and payment processors to shut up about Operation Choke Point. They don’t want them disclosing to businesses like Mike’s that federal regulators ordered the service terminations. So they’re offering a “reminder” that regulators “may not” release that information to “third parties”–the affected businesses.
This is a bureaucracy behaving more like the Soviet dictatorship than like a group of civil servants. The administration’s veiled threat is tantamount to witness tampering.
Operation Choke Point–and the bureaucratic attempt to cover up its existence–are a sobering reminder of the dangers of centralized power. It’s a genuine threat to freedom when federal bureaucrats have it in their power to ruin the lives and destroy the livelihoods of ordinary, law-abiding Americans.