Issa: 'Operation Choke Point' Is Illegal, Must Be Dismantled
by Michael Patrick Leahy 30 May 2014 418 post a comment
The Justice Department's “Operation Choke Point” is so flagrantly illegal it cannot continue in any form under the law, the House Oversight and Government Reform Committee Charman Darrell Issa's staff said in a new report, setting up a constitutional confrontation between the legislative and executive branches of the federal government.
"In light of the Department's obligation to act within the bounds of the law, and its avowed commitment not to 'discourage or inhibit' the lawful conduct of honest merchants, it is necessary to disavow and dismantle Operation Choke Point,” the report said.
The controversial Obama administration initiative known as Operation Choke Point was launched in 2013.
DOJ has said the program is targeted at fraud, but the oversight committee report provided evidence the program was "was created by the Justice Department to 'choke out' companies the Administration considers a 'high risk' or otherwise objectionable, despite the fact that they are legal businesses."
In one internal document uncovered by the committee, Obama administration officials described banks cutting off an entire class of businesses – Internet payday lenders – as a “significant accomplishment” of the investigation. The document also acknowledged “the possibility that banks therefore may have decided to stop doing business with legitimate lenders” but said “solving that problem – if it exists – should be left up to the legitimate lenders themselves” who can make additional efforts to prove to banks they are not engaged in fraud.
“Such an expectation – 'if they are legitimate, they can prove it' – is patently absurd, and
reminiscent of the formulation that “if one is not a witch, then they will sink rather than float,” the report said.
The report said "Operation Choke Point has forced banks to terminate relationships with a wide variety of entirely lawful and legitimate merchants," and that the Department of Justice "is aware of these impacts, and has dismissed them."
The report was issued more than four months after Representative Darrell Issa (R-CA), Chairman of the House Oversight and Government Reform Committee, requested the Department of Justice turn over all documents related to the secretive Obama administration initiative.
The initial deadline for compliance with the request, January 23, 2014, passed with no indication that the Department of Justice had complied.
Sources tell Breitbart News that the long delay between Chairman Issa's request for documents from the Department of Justice and the release of the staff report was caused by a reluctance on the Department's part to fully comply with the request. It is still unclear if all the documents requested have been turned over to the committee.
The report found that Attorney General Eric Holder knew about Operation Choke Point prior to its launch, knew that it was designed to target legal, law abiding citizens, and fully supported its implementation. It also suggests that subsequent to the discovery of the program by the press in late 2013, there may have been an effort by the Department of Justice to cover up key aspects of its operation.
Executives in the payday loan industry have said their industry was targeted by the initiative. Lisa McGreevy of the Online Lenders Alliance, said the staff report confirmed what the industry has been saying for some time. According to McGreevy, the Department of Justice has been "engaged in a coordinated effort to eliminate the online lending industry and choke off consumer access to the short-term credit millions of Americans need."
Though spokespersons for the Department of Justice publicly denied targeting a specific industry, the report found that "[c]ontrary to the Department [of Justice]'s public statements, Operation Choke Point was primarily focused on the payday lending industry."
Many business executives have publicly expressed concern that the list of targeted industries has steadily expanded beyond the payday loan industry. The staff report confirmed those concerns, nothing that manufacturers, distributors, and dealers of firearms and ammunition, and coin dealers are now also being targeted by the Department of Justice.
The program's lack of statutory authority was also addressed.
"Operation Choke Point," the report said, "is being executed through subpoenas issued under Section 951 of the Financial Institutions Reform, Recovery, and Enforcement Act of 1989."
Noting that "[t]he intent of Section 951 was to give the Department the tools to pursue civil penalties against entities that commit fraud against banks, not private companies doing legal business," the report concluded that "[d]ocuments produced to the Committee demonstrate the Department has radically and unjustifiably expanded its Section 951 authority."
This approach, the report said "fundamentally distorts Congress' intent in enacting the law, and inappropriately demands that bankers act as the moral arbiters and policemen of the commercial world."
On Thursday, Justice Department spokesperson Emily Pierce commented on one aspect of the staff report, stating that the Department "only investigate
banks and third-party payment processors that violate federal law, and these documents suggest nothing to the contrary."
The Department of Justice has not responded to a Breitbart News request for comment on the staff report's conclusion that the Department should "disavow and dismantle Operation Choke Point."