Fine Points


Riding Roughshod

By Camden Fine

Heaven protect us from the government’s agents of do-goodism.

Unfortunately, the U.S. Justice Department has a Lone Ranger vigilante squad riding roughshod within its bureaucratic ranks. That self-deputized morality posse has been exposed through Operation Choke Point, a law enforcement initiative targeting third-party payment processors and their financial institutions that process payments for businesses engaged in higher-risk, but legal, activities.

Not content with pursuing true lawbreakers, however, at least some officials involved with Operation Choke Point have instead strayed off the legitimate law-enforcement path into meddlesome political pastures. These badge-toting, unaccountable bureaucrats at the Justice Department, most likely working with a nudge and a wink from other federal agencies, have started chasing a few personal hobbyhorses—the costly but legally operating check-cashing shops and payday lenders that some government officials view as disreputable or unsavory.

I am not here to defend the business models of check cashers or payday lenders; that’s for those industries to do. I’m writing about this topic because some officials involved with Operation Choke Point have been quietly pressuring financial institutions, including community banks, to deny these lawful businesses access to mainstream payment services and essential banking accounts. This is an abuse of government and policing power that is alarming and dangerous.

Whatever anyone feels about the high costs of using check cashers and payday lenders, Congress has decided these industries are legitimate. In fact, during their deliberations over the Dodd-Frank Wall Street reform legislation, federal lawmakers reviewed the payday business model and decided not to interfere with these state-regulated companies, which millions of Americans rely on.

No government official should coerce any lawfully operating company, either directly or indirectly, not to do business with—or to do business with—any other lawfully operating company. Similarly, no government official should decide which financial services a lawful business may or may not access. Advancing any government agenda threatens every American’s economic freedom. Allowing check cashers and payday lenders to be targeted today leaves almost any other set of lawfully operating businesses vulnerable to similar treatment tomorrow.

Of course, every community bank supports the prosecution of criminals operating in the financial system. Community banks and other financial institutions dedicate considerable time and resources to monitoring and reporting for possible financial crimes under the Bank Secrecy Act. But Operation Choke Point reveals the unwelcome trend of requiring banks to serve more as snooping agents for the government rather than as trusted financial service providers. Needless to say, ICBA is extremely concerned that Operation Choke Point is forcing community banks to make untenable choices of either severing valuable and legal customer relationships or risking Justice Department enforcement actions.

Working with other payments industry groups, ICBA has asked the Justice Department to suspend Operation Choke Point and redirect the program’s resources to other programs legitimately investigating businesses that may be violating the law. Now both Democrats and Republicans in Congress are concerned about this program. Several lawmakers are attempting to learn more about Operation Choke Point, so this story is still unfolding.

When cape-crusading government officials begin to pick winners and losers among legally operating businesses, everyone should be very concerned. Programs like Operation Choke Point can all too easily cross the line separating freedom from tyranny.

Camden R. Fine, President and CEO of ICBA
Reach Camden R. Fine at