The FDIC made a weak admission to Operation Choke Point and its targeted “risk management” in shutting down certain accounts without explanation.
June 27, 2019
You walk into your bank to do some business. You pull out your ID, hand it to the teller, and wait for your money or deposit receipt. But then something creepy happens…
teller says, “I’m sorry, we’ve received notice that your activities are ‘high
risk,’ so I’m afraid we’ve shut your account down.”
You talk to the manager, and get the same story. You work your way up the chain, and no one is willing to give you much more information than “I’m sorry.”
So you take your money, and go to a different bank, but you can’t open an account because they also think you’re “high risk.” You feel like you’ve been “black balled.”
Now stop imagining, this nightmare of Government overreach is real.
Introducing the over-reaching U.S. operation enacted in 2012 called “Operation Choke Point.” An article on Forbes explains:
Last week brought new revelations regarding Operation Choke Point, the Obama administration’s effort to freeze politically disfavored businesses out of the financial system. Rep. Blaine Luetkemeyer (R-Mo.), who helped lead a multi-year effort to shut the program down, highlighted some of the newest findings and pointed out that stopping Operation Choke Point is not a partisan issue.
In fairness, some of the types of businesses the Operation was created to address were high-risk lenders like payday loan companies. But they are legal in the U.S., so you would also have to ask if you want any Government agency interfering with legal business operations by cutting off their bank.
And before you think there is some long, complicated, and well-thought-out process to go through before the FDIC could have your account closed … there isn’t.
From the same article:
Officials at the Federal Deposit Insurance Corporation (FDIC), for instance, simply had to inform the banks they were overseeing that the government considered certain types of their customers “high risk.”
So, if you liked to move your money around, say to investments or offshore accounts that the U.S. Government didn’t approve of, two words and your main account is closed. Even if what you were doing is completely legal.
Then, you’re black balled, because the actual “reason why” is locked away in a database. So you can’t open an account (or get a loan) in your area at any other bank.
Over at American Banker, they give an example of how a “low risk” and 100% legal business gets their account shut down by the “Banking Mafia” (emphasis mine):
In one example of blatant intimidation, a bank terminated its relationship with a legal business after threats from the FDIC. The bank eventually surrendered to the pressure, and when the bank notified the FDIC of the decision, they admitted that a risk assessment showed the business “pose[d] no significant risk to the financial institution, including financial, reputation, and legal risk,” yet they still terminated the banking relationship.
So the bank found the business was “low-risk,” but the FDIC intimidation was enough to get their account closed.
Ultimately, two businesses ended up suing the FDIC in DC District Courts.
The FDIC “Settled” the Lawsuit, But is The Issue Settled?
The FDIC was sued, tried to get the lawsuit dismissed, but failed. So they settled. You might think that this was a big win for the plaintiffs, but it wasn’t.
The “settlement” got the Plaintiffs to dismiss the charges against the FDIC in exchange for some concessions. I won’t list all of them here, but two are suspicious:
First: The FDIC was required to issue a statement, and it appears they tried to downplay what actually happened, saying:
… “that certain employees acted in a manner inconsistent with FDIC policies with respect to payday lenders in what has generically been described as ‘Operation Choke Point’ and that this conduct created misperceptions about the FDIC’s policies.”
Second: If an institution is not properly managing risks associated with deposit accounts, the FDIC may take supervisory action, including recommending or requiring termination of a deposit account.
So this allows “Operation Choke Point” to continue in full force, and not much appears to have changed. Granted, the FDIC statement said that recommendations to terminate an account “are not made through informal suggestions.”
But do you want to take what any U.S. Government Agency says at face value, especially when it concerns your money?
Ironically, Congressman Blaine Luetkemeyer left a closing thought, expressing his outrage on American Banker:
I am deeply concerned by the blatant intimidation, coercion and bias employed by unelected government officials to play politics with the livelihood of Americans. No matter your ideological leanings, the government should not be able to destroy all that you have worked for in pursuit of the American dream.
Even though that thought comes from a politician, I think we should all take notice and keep our options open.
Now take a moment and consider how safe your money is, and the integrity of the financial institution where that money is kept.
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