Operation Choke Point – Overlawyered

Operation Choke Point documents show FDIC brass covertly pressured banks

Walter Olson — Sun, 11 Nov 2018 17:03:33 +0000

Since the termination of Operation Choke Point, some have questioned whether Obama-era federal regulators really did engage in systematic and top-down attempts to squeeze off access to financial services for businesses that were lawful but disliked. Now Rep. Blaine Luetkemeyer (R-Mo.) has released documents produced in connection with a lawsuit against the Federal Deposit Insurance Corporation. They show extensive pressure by numerous FDIC regional directors and other officials on regulated banks to terminate customer relationships with payday lenders (the banks were generally already not themselves engaged in such lending). They also include repeated wordings about how higher-ups wanted the pressure applied and that banks’ decisions to cut off customers should be styled as if it were a voluntary choice. [Luetkemeyer press release; Norbert Michel, Forbes; John Berlau, Forbes; trade group Community Financial Services of America]

Tags: banks, Operation Choke Point, regulation and its reform

Operation Choke Point documents show FDIC brass covertly pressured banks is a post from Overlawyered - Chronicling the high cost of our legal system

Good riddance, Operation Choke Point

Walter Olson — Tue, 22 Aug 2017 10:14:16 +0000

The Department of Justice has confirmed that it is putting an official end to Operation Choke Point, the under-the-radar initiative by Obama financial regulators to discourage banks from doing business with certain disfavored businesses such as payday lenders and gun dealers. I’ve written a piece for the Washington Examiner on it, excerpt:

The fate of Choke Point should serve as a warning that it’s dangerous to allow those in power to flag legal-but-suspect domestic businesses for shaming and commercial ostracism — especially if the process is covert, and especially if the result is to cut off the outcasts from access to the basics of economic life.

At the same time, it’s significant that the answer to Choke Point was *not* to pass some new law compelling banks to do business with payday lenders, fireworks stands, or X-rated studios.

Part of a free society is that we shouldn’t force commercial relationships on private actors. Businesses — and that includes providers of credit and payments services — should legally be free to follow their conscience.

And Eric Boehm quotes me at Reason:

“It should serve as a warning that the government doesn’t get to flag for banks—or businesses generally—which legal-but-suspect domestic customers it would like them to ostracize,” Olson told Reason on Friday. “Those in power must refrain from signaling that they’d be pleased if certain categories of otherwise legal customer get cut off from their access to economic life.”

Earlier at our tag. More coverage: Politico, Vending Times (vending machine sales companies hail decision).

Tags: banks, guns, Operation Choke Point, WO writings

Good riddance, Operation Choke Point is a post from Overlawyered - Chronicling the high cost of our legal system

Banking and finance roundup

Walter Olson — Mon, 29 Aug 2016 04:05:37 +0000

Wells Fargo declines to serve firm that sells knives online, which might relate to a “mass de-risking” trend that followed Operation Choke Point [Kelsey Harkness/Daily Signal, H. Clay Aalders/The Truth About Knives]
“Time For Securities Lawyers To Stand Behind Their `Confidential Witnesses'” [Lyle Roberts via Daniel Fisher]
Attractions of English law may help London retain luster as financial center post-Brexit [Jon Sindreu, WSJ]
“Hillary Clinton’s ‘Exit Tax’ Is an Unseemly Example of Banana Republic Economics” [Daniel Mitchell, related earlier] Three good ideas from Clinton’s small business tax plan [Scott Greenberg, Tax Foundation]
Lawyers file class actions against Yale, Harvard, MIT, many other universities, objecting to excessive fees on retirement fund investments [Ira Stoll, Future of Capitalism; Benjamin Edwards, PrawfsBlawg]
“White House climate disclosure plan is major executive overreach.” [Ray Lehmann, R Street Institute]

Tags: banks, climate change, colleges and universities, Hillary Clinton, Operation Choke Point, securities litigation, United Kingdom, Wall Street

Banking and finance roundup is a post from Overlawyered - Chronicling the high cost of our legal system

Banking and finance roundup

Walter Olson — Mon, 18 Apr 2016 04:05:36 +0000

To keep your sex business free from the coils of federal regulation, your best bet might in fact be Ted Cruz, implacable opponent of Operation Choke Point [Elizabeth Nolan Brown; more from Snopes on rather silly attacks on Cruz for doing job lawyers are expected to do for clients in Texas case]
Snoopy, you’re not systematically important: judge frees MetLife from SIFI designation under Dodd-Frank [Thaya Brook Knight/Cato, John Cochrane]
What with Sen. Elizabeth Warren trying to put a lid on some companies’ criticism of the Labor Department’s fiduciary rule, hope it’s still OK for the rest of us to talk about it [Thaya Brook Knight, Cato]
Sen. Warren isn’t only one using letters to SEC to browbeat businesses: New York City elected Public Advocate Letitia (“Tish”) James tries to hassle gunmaker Sturm Ruger to comply with various demands of gun control advocates [Manikandan Raman, Benzinga/Yahoo; more on Ms. James and her blames]
Next term Supreme Court will consider case on scope of insider trading law, Salman v. U.S. [Ira Stoll, more] “Returning to Common-Law Principles of Insider Trading After United States v. Newman” [Richard Epstein, Yale Law Journal on Second Circuit’s decision via Stoll]
DoJ cracks down on big-investor activism — at least when of a sort antitrust enforcers don’t like [Matt Levine]

Tags: antitrust, Department of Justice, Elizabeth Warren, guns, NYC, Operation Choke Point, Securities and Exchange Commission

Banking and finance roundup is a post from Overlawyered - Chronicling the high cost of our legal system

Banking and finance roundup

Walter Olson — Fri, 06 Nov 2015 05:05:52 +0000

Robert Litan in Fortune on why Elizabeth Warren went after him;
“Economists have no idea how to measure the value created by the financial sector.” [Arnold Kling]
W$J at end of August had an investigative report on the (opaque, high-discretion, unaccountable) system of installing “monitors” in banks and other financial institutions to settle civil or criminal charges;
Update: in a sidebar to my City Journal piece on New York Attorney General Eric Schneiderman this summer, I covered his charges of “redlining” against small upstate banks that did not operate in inner cities; now Schneiderman has extracted $825,000 from a Buffalo bank [NY AG press release]
No kangaroo courts at the SEC, please [Bloomberg View editorial on in-house adjudicators, earlier here, etc.]
How the FATCA law, deplored in this space for years, makes life hard for U.S. expatriates/spouses [Colleen Graffy, WSJ]
“Except for the ten to twelve million people who use them every year, just about everybody hates payday loans.” [New York Fed “Liberty Street Economics” via Tabarrok] Despite reports of FDIC back-off, Operation Choke Point controversy not over [Ballard Spahr via Kevin Funnell]

Tags: banks, Elizabeth Warren, Eric Schneiderman, FATCA, Operation Choke Point, settlement monitors

Banking and finance roundup is a post from Overlawyered - Chronicling the high cost of our legal system

Banking and finance roundup

Walter Olson — Thu, 30 Jul 2015 04:05:44 +0000

“Fee-shifting: Delaware’s self-inflicted wound” [Stephen Bainbridge, more] Needed: a new Delaware [Reuters] Fordham lawprof Sean Griffith fights trial bar on shareholder suits [Bainbridge, more]
Goodbye, insurance (hugs). I think I’ll miss you most of all. [Bridget Johnson on anti-cinema, anti-stock-trading views of radical Islamist British activist and former lawyer Anjem Choudary]
Rare coalition of bankers, housing advocates urges limits on mortgage-related suits [W$J]
“The Administrative State v. The Constitution: Dodd-Frank at Five Years” hearing includes testimony from Mark Calabria of Cato (law delegates vast authority to bureaucracy, has failed to generate clear rules for regulated parties) and Neomi Rao of George Mason (unconstitutionality of Consumer Financial Protection Bureau) [Senate Judiciary Committee, related on a CFPB constitutional challenge]
Do-it-yourself Operation Choke Point: letter from one Illinois sheriff shut down adult-ad credit card payments [Maggie McNeill, Daniel Fisher]
“Obama DOJ Channels Bank Shakedown Money To Private Groups” [Dan Epstein, Investors Business Daily]
“The U.S. listing gap” [Doidge, Karolyi, & Stulz NBER paper via Tyler Cowen, MR]

Tags: banks, Delaware, Dodd-Frank, insurance, mortgages, Operation Choke Point, securities litigation

Banking and finance roundup is a post from Overlawyered - Chronicling the high cost of our legal system

Banking and finance roundup

Walter Olson — Fri, 24 Apr 2015 04:05:42 +0000

Critics say by naming payment processors in massive enforcement action over debt collection practices, CFPB is implementing its own version of Operation Choke Point [Kent Hoover/Business Journals; Barbara Mishkin, Ballard Spahr; Iain Murray, CEI]
Green sprout in Amish country: “Bank of Bird-in-Hand is the only new bank to open in the U.S. since 2010, when the Dodd-Frank law was passed” [WSJ via Tyler Cowen; Kevin Funnell on smothering of new (de novo) bank formation; Ira Stoll (auto-plays ad) on growth of non-bank lenders]
“Quicken Loans Sues DOJ; Claims ‘Political Agenda’ Driving Pressure to Settle” [W$J; J.C. Reindl, Detroit Free Press]
Shocker: after years of Sen. Warren’s tongue-lashings, some banks consider not giving to Democrats. Is that even legal? [Reuters] “Elizabeth Warren’s Extraordinarily Bad Idea For A Financial Transactions Tax” [Tim Worstall]
Still raging on: Delaware debate about fee-shifting corporate bylaws as deterrent to low-value shareholder litigation [Prof. Bainbridge first, second, third posts]
“How a Business Owner Becomes Criminally Liable for How Customers Spend ATM Withdrawals” [Elizabeth Nolan Brown, Reason]
New York financial regulator pushes to install government monitors at firms where no misconduct has been legally established [Robert Anello, Forbes]

Tags: banks, CFPB, corporate governance, Delaware, Department of Justice, Dodd-Frank, Elizabeth Warren, loser pays, New York, Operation Choke Point, settlement monitors, Wall Street

Banking and finance roundup is a post from Overlawyered - Chronicling the high cost of our legal system

Banking and finance roundup

Walter Olson — Fri, 27 Mar 2015 04:05:31 +0000

Administration has abused the law in mortgage lender settlements [House Judiciary hearing: Paul Larkin, Ted Frank testimony]
Department of Justice official says banks may need to go much farther in informing authorities of customers who may be up to no good than just sending Suspicious Activity Reports (SARs) [Kevin Funnell] Interpol Red Notices, which among other effects cut off banking access, are open to geopolitical manipulation [Ted Bromund, Weekly Standard]
No, Operation Choke Point hasn’t gone away, not in the slightest [Funnell, Jared Meyer/Economics21]
What Elizabeth Warren has done to Michael Greve’s mortgage refinance application isn’t pretty [Liberty and Law]
Battle over loser-pays clauses in corporate governance rages on in Delaware [Reuters]
“The U.S. government’s stupid tax war on expatriates” [Brett Arends, earlier on FATCA]
Dodd-Frank: “Wall St. attacked, Main St. wounded” [Iain Murray]

Tags: banks, Delaware, Dodd-Frank, Elizabeth Warren, FATCA, mortgages, Operation Choke Point

Banking and finance roundup is a post from Overlawyered - Chronicling the high cost of our legal system

Banking and finance roundup

Walter Olson — Thu, 12 Feb 2015 05:05:13 +0000

Calvin’s refuge: how Swiss banking confidentiality undermined state despotism [Matt Welch, who also discusses how the gruesome FATCA law is proving to be the first component of an multilateral effort by OECD governments to curtail account privacy]
Dodd-Frank compliance costs and the rapid decline of community banks [Marshall Lux and Robert Greene/Kennedy School, Carrie Sheffield, Jeff Sovern with a scoffing view; WSJ]
“The IRS seized $242 million based on suspected structuring in more than 2,500 cases from 2005 to 2012.” [Jacob Sullum, new Institute for Justice report (PDF) by Dick Carpenter II and Larry Salzman and summary] More: new structuring case against Dubuque, Iowa widow raises question of whether feds have really followed through on promise not to press structuring charges where income is otherwise legal [AP/WHEC]
“House Investigators: DOJ Forced Banks to Donate to Left-Wing Groups” [Joel Gehrke, NRO]
“FDIC retreats on Operation Choke Point?” [Todd Zywicki] Rep. Luetkemeyer likely to keep up the pressure on regulators [Kevin Funnell]
“Fed Officials Accused of Perjury in AIG Bailout Trial” [Lawrence Cunningham, Concurring Opinions]
“Standard & Poor’s Settlement Shows Futility Of Fighting Government Policy” [Daniel Fisher, earlier]

Tags: banks, Dodd-Frank, FATCA, Operation Choke Point, Switzerland

Banking and finance roundup is a post from Overlawyered - Chronicling the high cost of our legal system

December 18 roundup

Walter Olson — Thu, 18 Dec 2014 05:05:38 +0000

Michael Greve reviews new James Buckley book offering critique of fake (“cooperative”) federalism under aid-to-state programs [Liberty and Law; Chris Edwards/Cato on Buckley book, more]
Cuban expatriates will now have access to US banking services. Next step: call off Operation Choke Point so domestic businesses can have it too. [earlier coverage of Choke Point including its effects on, yes, cigar shops; details on new relaxation of Cuba sanctions, and related effects of banking sanctions]
Sac and Fox tribe appeals ruling in favor of town of Jim Thorpe, Pa. on demands for disinterment and return of remains of athlete Jim Thorpe [Allentown Morning Call, my recent writing on the case here and here]
NFL owners “rarely settle any dispute… Each owner pays only 1/32nd of the legal bill, and the owners love to fight” [ESPN]
Adios Google News: Spanish press “not even waiting for the blood to dry on the hatchet before bemoaning the loss of their golden eggs” [Julian Sanchez, Cato]
Union official knew New York Attorney General Eric Schneiderman was going to sue pizza operator before the operator did. Hmmm [Kevin Mooney, Daily Signal]
Nevada goes to ridiculous lengths unsuccessfully trying to regulate airport taxis, but at least they’ll try to keep you from using ride-sharing, so that’s something [Blake Ross, Medium; Reuters]

Tags: federalism, football, Google, Indian tribes, Nevada, Operation Choke Point, taxis and ridesharing

December 18 roundup is a post from Overlawyered - Chronicling the high cost of our legal system