Issa questions motives of DoJ’s “Operation Choke Point”

Rep. Darrell Issa (R-Calif.) released a staff report on Thursday alleging that a program administered by the Department of Justice (DoJ) targeted industries that the Obama administration opposed.

Issa, the chairman of the House Oversight and Government Reform Committee, called into question the motive of “Operation Choke Point.” Under the program, the DoJ investigated banks and payment processors to prevent mass-market consumer fraud by closing payment systems used by fraudsters.

“Operation Choke Point is the Justice Department’s newest abuse of power,” Issa said. “If the administration believes some businesses should be out of business, they should prosecute them before a judge and jury. By forcibly conscripting banks to do their bidding, the Justice Department has avoided any review and any check on their power.”

Issa’s staff report concluded that Operation Choke Point forced banks to cut off relationships with lawful merchants for fear that a “reputational risk” would lead to a federal investigation. Among those merchants were coin dealers, firearms and ammunition retailers, and short-term lenders.

Senior officials informed Attorney General Eric Holder that Operation Choke Point was forcing banks to abandon lines of business that the federal government deemed “high risk,” according to the staff report.

The DoJ administers the program under a section of the Financial Institutions Reform, Recovery and Enforcement Act of 1989 that was designed to empower the DoJ to initiate civil penalties against those who commit fraud against banks.

According to the staff report, Operation Choke Point’s primary focus was the payday lending industry, and senior officials said the industry’s elimination would be a “significant accomplishment” for consumers.