WASHINGTON, D. C — I first wrote about this in 2015-unfortunately, it has pretty much come true. Quietly.
You walk into your bank, pull out your ID, hand it to the teller, and wait for your money or deposit receipt. But then something happens …
“I’m sorry, we’ve received notice that your activities are ‘high risk,’; we’ve shut your account down.”
You talk to the manager; same story. You work your way up the chain, and no one is willing to give you much more information than “I’m sorry.”
So you take your money, and go to a different bank, right?
Guess what?- you can’t open an account because they also think you’re “high risk.”
In fact, you can’t open an account at all.
Which means you can’t cash checks.
Pretty much ANYTHING involving your money. Including pay an attorney to defend you.
Now stop imagining, this nightmare of Government overreach is real.
Introducing the over-reaching U.S. operation enacted in 2012 called “Operation Choke Point.”
Last week brought new revelations regarding Operation Choke Point, the Obama administration’s effort to freeze politically disfavored businesses out of the financial system. Rep. Blaine Luetkemeyer (R-Mo.), who helped lead a multiyear effort to shut the program down, highlighted some of the newest findings and pointed out that stopping Operation Choke Point is not a partisan issue.
Although some of the types of businesses the Operation was created to address were high-risk lenders (like payday loan companies) it should be noted that they are legal in the U.S.
One would also have to ask if it is a good idea to want any Government agency interfering with legal business operations by cutting off their money access. Pretty much a neat way to get around all of that pesky “due process” and “preponderance of evidence” nonsense.
And before you think there is some long, complicated, and legally reviewed process to go through before the FDIC could have your account closed … there isn’t. Any more than getting a negative item entered on one’s credit report.
From the same article:
Officials at the Federal Deposit Insurance Corporation (FDIC), for instance, simply had to inform the banks they were overseeing that the government considered certain types of their customers “high risk.”
So, if you liked to move your money around, say to investments or offshore accounts that the U.S. Government didn’t approve of, two words and your main account is closed.
Even if what you were doing is completely legal.
The actual “reason why” is locked away in an inaccessible database. So you can’t open an account (or get a loan) in your area at any other bank. Sounds like a de facto involuntary bankruptcy to me.
American Banker, gives an example of how a “low risk” and 100% legal business gets their account shut down by the “Banking Mafia”:
In one example of blatant intimidation, a bank terminated its relationship with a legal business after threats from the FDIC. The bank eventually surrendered to the pressure, and when the bank notified the FDIC of the decision, they admitted that a risk assessment showed the business “pose[d] no significant risk to the financial institution, including financial, reputation, and legal risk,” yet they still terminated the banking relationship.
So the bank found the business was “low-risk,” but the FDIC intimidation was enough to get their account closed. You can kiss that stupid “innocent until proven guilty” presumption goodbye.
Ultimately, two businesses ended up suing the FDIC in DC District Courts.
The FDIC “Settled” the Lawsuit, But is The Issue Settled?
The FDIC was sued, tried to get the lawsuit dismissed, but failed. So they settled. A big win for the plaintiffs?
The “settlement” got the Plaintiffs to dismiss the charges against the FDIC in exchange for some concessions.
Two are very suspicious:
First: The FDIC was required to issue a statement, and it appears they tried to downplay what actually happened, saying:
… “that certain employees acted in a manner inconsistent with FDIC policies with respect to payday lenders in what has generically been described as ‘Operation Choke Point’ and that this conduct created misperceptions about the FDIC’s policies.”
Second: If an institution is not properly managing risks associated with deposit accounts, the FDIC may take supervisory action, including recommending or requiring termination of a deposit account.
So this allows “Operation Choke Point” to continue in full force, and not much appears to have changed. Granted, the FDIC statement said that recommendations to terminate an account “are not made through informal suggestions.”
Uhm, exactly what are they using, then? Grand Jury not involved, no warrant, no oversight committee, not even a Ouija™ board (OK, that last is-granted-a supposition …)
Congressman Blaine Luetkemeyer left a closing thought, expressing his outrage on American Banker:
“I am deeply concerned by the blatant intimidation, coercion and bias employed by unelected government officials to play politics with the livelihood of Americans. No matter your ideological leanings, the government should not be able to destroy all that you have worked for in pursuit of the American dream.”
That thought comes from a politician, but It should be noted that although he is clearly disturbed about this procedure, nothing has been changed.
Tomorrow: Choke Point 2.0.
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