By Stephanie K. Mann, J.D.
A coalition of community, consumer, and civil rights organizations has submitted a letter to members of the Senate, urging them to oppose S. 2790, the Financial Institution Consumer Protection Act of 2016. The bill, introduced by Sen. Ted Cruz (R-Texas), would end Operation Choke Point, the program created by the Department of Justice to “choke out” companies that were seen as posing a high risk of payment fraud, money laundering, or other abuses by denying them access to the banking and payments system. The House passed a similar bill, H.R. 766, earlier this year.
According to the letter, the bill would hamper critical Department of Justice and banking regulator efforts to detect fraud and money laundering, putting consumers and financial institutions at risk of serious financial loss.
With escalating data breaches, terrorism threats, and internet fraud, the trade associations emphasized that efforts to deprive criminals of access to the banking system must be encouraged, not discouraged. “S. 2970 will only frustrate the efforts of Federal regulators that to date, have successfully halted numerous mass-market fraud schemes, protected countless consumers from the financial hardship that follows fraud and have done so without any evidence of misconduct or targeting of lawful businesses.”
No evidence of wrongdoing. According to the associations, an inquiry by the Department of Justice Office of Professional Responsibility found no evidence of misconduct or targeting of legal business by Operation Choke Point. In addition, a report from the Federal Deposit Insurance Corporation Inspector General found that the FDIC’s involvement in Operation Choke Point was inconsequential to the direction and outcome of the initiative.
To the contrary, said the letter, every case brought by the DOJ as part of its investigation “clearly indicated” that the banks and payment processors involved were knowingly engaged in fraudulent activity that resulted in millions of dollars drained from consumers’ bank accounts.
The letter also cited the Obama Administration’s strong opposition to the House version of the bill.
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