Operation Choke Point…US government uses denial of banking services to censor what it does not like

Posted: 1 June, 2014 in US News
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Read more US Censorship News at MelonFarmers.co.uk

doj logo The Justice Department’s Operation Choke Point initiative has been shrouded in secrecy, but now it is starting to come to light. It is so named because through strangling the providers of financial services to the targeted industries, the government can choke off the oxygen (money) needed for these industries to survive. Without an ability to process payments, the businesses, especially online vendors, cannot survive.

The general outline is the DOJ and bank regulators are putting the screws to banks and other third-party payment processors to refuse banking services to companies and industries that are deemed to pose a reputation risk to the bank. Tom Blumer’s extremely informative post summarizing what is known to date about Operation Choke Point reproduces the list of businesses affected, which includes things such as ammunition sales, escort services, get-quick-rich schemes, on-line gambling, racist materials and payday loans. Quite obviously, some of these things are not like the other; moreover, just because there are some bad apples within a legal industry doesn’t justify effectively destroying a legal industry through secret executive fiat.

There are also reports that porn stars (and here) have had their bank accounts terminated for moral reasons related to the reputation risk of banking individuals in the porn industry. So far, one of the porn stars has sued to try to determine why his loan application was denied.

The larger legal and regulatory issue here is the expansive use of the vague and subjective standard of reputation risk to target these industries. In a letter to Janet Yellen, the chair of the Federal Reserve, last week, House Financial Services Committee Chairman Jeb Hensarling expressed concern over the growing use of reputation risk as a vehicle for attacking legal businesses.

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