Newspaper article Pittsburgh Post-Gazette (Pittsburgh, PA)

Chokehold the FDIC Was off Base in Shutting Bank Accounts

Newspaper article Pittsburgh Post-Gazette (Pittsburgh, PA)

Chokehold the FDIC Was off Base in Shutting Bank Accounts

Article excerpt

Two years ago, the U.S. Justice Department decided to help consumers by nudging banks to shut down the accounts of businesses it considered at high risk for perpetuating fraud. The program, called "Operation Choke Point," was administered by the Federal Deposit Insurance Corp., the agency that regulates 4,500 U.S. banks. It seemed an extraordinarily effective way to stunt morally dubious ventures such as Ponzi schemes and pornography.

But it also seemed extraordinarily illegal, as many businesses on the "high-risk" list were legitimate and law-abiding. Though the program has been scaled back and the controversial list rescinded, Operation Choke Point should be shuttered. Prosecutorial authority extends only to crime, not its potential.

Among the 30 types of businesses the FDIC urged banks to restrict were payday lenders, dating services, coin dealers and purveyors of tobacco, guns and fireworks - all legal, at least in most parts of the United States. …

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