Obama’s Operation Choke Point And The New American Legal System
Posted By Andrew Langer On 5:06 PM 05/13/2014
Recently social media was ablaze with the news that adult entertainer, Teagan Presley, had received word from Chase Bank that they were closing her account. Presley had just become the latest law-abiding citizen to be swept up in “Operation Choke Point,” an joint effort by the Departments of Justice, Treasury and a handful of other agencies to effectively shut-down industries that the federal government doesn’t like. Here’s the catch – they have no legal authority to shutter them and most of the victims of this overreach are losing their banking relationships even though they’ve done nothing wrong.
Targeting the adult entertainment industry may have been a gross tactical error on the part of the federal government. Until now, Operation Choke Point had been focusing on easy targets: short-term lenders, check cashing businesses, and online ammunition sales. All of those are legal industries, but the attacks garnered little public attention and therefore even less sympathy. Not so when it comes to the adult entertainment industry.
Regardless of where you are on the ideological spectrum, Operation Choke Point should greatly disturb you. You may not like payday lenders, pornography, or guns and ammunition, but it should worry anyone that the power of the federal government could operate in a manner that circumvents due process and is exercised with almost no accountability.
Operation Choke Point works like this: the inter-agency group selects an industry target, let’s say, an at-home business that sells cosmetics. Agents working on Operation Choke Point then contact the financial institutions where these entrepreneurs both have their bank accounts and process their payments, informing them that the federal government considers this industry “risky” and potentially “fraudulent.” The government then “encourages” these financial institutions to cease doing business with individuals within that industry, which are mostly independent small business owners. If the financial institution does not cease doing business with them, then the full weight of federal regulatory power (DOJ, Treasury, FDIC, CFPB) will be brought to bear on the bank or payment processor.
Not wanting to be buried under red tape, these financial institutions then close bank accounts and refuse to process credit card payments for the business even if no impropriety has ever been alleged by any agency or legal entity. The end result is that the flow of cash to and from these businesses is “choked off” and the business dies. Whole industries can be destroyed using this method.
This is the new American judicial system. No need for cumbersome new legislation or regulations. No need for a public debate on the merits, or an accounting of the impact of this operation through the normal regulatory processes. The federal government merely pushes a button and these businesses are destroyed.
This is especially troubling when the industries at issue have had their right to exist debated in both legislative and judicial arenas—and their rights have been upheld by the courts.
Whether it is the First Amendment and pornography or the Second Amendment and firearms and ammunition, Operation Choke Point circumvents the Constitution’s protections. But perhaps you don’t care about porn, guns, payday lenders, or any of the current targets of Operation Choke Point. In that case, what ought to be of deep and abiding concern is the lasting legacy — the precedent that creates a new reality for all of us.
If Operation Choke Point is allowed to grow unchallenged, then no industry is safe from an administration, Republican or Democrat, that has decided to support that industry’s destruction but doesn’t want to go to the trouble of the legal or legislative process.
So you may not like short-term lenders, but perhaps you are in favor of marijuana legalization. If Operation Choke Point stands, there is nothing to prevent the targeting of legal dispensaries and growing operations having their bank accounts canceled or payment processing shut down.
Should this extra-legal process go unabated, there is nothing that would prevent, for instance, the targeting of businesses that provide materials for home school education. There is no reason why an administration with this power would hesitate to use it to promote a particular ideology or special interests in the financial services or energy sectors. In fact, it’s already happening.
Liberty is derived from the diffusion of sovereign power — power that must be balanced and checked and limited. Operation Choke Point is vast and unbridled power, hurting real people and their ability to make a living. No matter where you stand, progressive or conservative, you should be deeply concerned about the legacy of Operation Choke Point, and should be calling for its cessation immediately.
We break down Mother's Day, Andrew's trip to LA. We talk about secret money in politics... on the progressive side, our take on Michelle Obama's radio address on the Nigerian schoolgirl kidnapping (and the problem of the Obamas making it all about them), and then we talk about the situation in Ukraine, and how we ought to be looking at Korea as the analog (not Vietnam or Iraq).
Episode 10 of the Langer Cast is now available! This week, Andrew and Jerry recap the White House Correspondents' Dinner, and discuss the new aristocracy--are we witnessing the rise of a monarchy in America? They review the Independent Women's Forum event on parenting and risk in public policy, talk about accountability in government and the appointment of Rep. Trey Gowdy to head the Select Committee to Investigate Benghazi. Finally they talk about the disrespect (and tacit racism) shown to former Secretary of State Condoleezza Rice by the Rutgers Community...
The latest episode of the Langer Cast is up! We talk about the Cliven Bundy Ranch situation and give a brief history of public lands issues in the west, to put things in context. We also talk about genetically-modified foods, and the promotion of fear over science. And we talk about the latest targets in Operation Choke Point!more»
We're live from Capitol Hill with Julie Gunlock of the Independent Womens Forum! We talk parenting, risk-based public policy, and the looming Siriacha crisis (will there be one?)!
WASHINGTON, D.C. -- Today, the House Financial Services Committee held an oversight hearing regarding the operations of the Consumer Financial Protection Bureau (CFPB). Despite their promises of transparency, the CFPB was once again reluctant to be forthcoming and clear with answers to questions from both Democratic and Republican lawmakers. On issues related to criteria used to target investigations of financial businesses, inappropriate pressures being brought to bear on banks, and the unprecedented action of paying for audience members to attend CFPB hearings in order to speak in support of CFPB policies, panelists were unwilling to provide in-depth answers to congressional questions.
Andrew Langer, President of the Institute for Liberty, an organization active on issues related to the CFPB, said the following:
“This hearing added nothing to the attempt to shed some light on the opaque operations of a hugely powerful regulatory agency, except to make it clearer than ever that this is an agency fundamentally out of control. Oversight only works when agencies are forthcoming and cooperative. CFPB was anything but. They’re not fooling anyone, though. More and more people are becoming aware of the mess of the CFPB.”