The Financial Services Committee informs MHProNews that the Oversight and Investigations Subcommittee held a hearing to scrutinize the role of the Federal Deposit Insurance Corporation (FDIC) in shuttering legitimate businesses by closing their bank accounts. The only witness at the hearing was FDIC Director Martin Gruenberg.
Termed Operation Choke Point, the Department of Justice (DOJ) and financial regulators determined particular businesses as “high risk” based on allegations of a heightened incidence of consumer fraud, regardless of whether they had done anything illegal.
Specifically, businesses targeted included gun dealers, payday lenders, ammunition manufacturers, short-term lenders and other legal vendors. FDIC regulators warned banks not to service these businesses with whom they had ideological differences or risk the government’s wrath.
Rep. Mick Mulvaney (R-SC) told of a constituent who owned a pawnshop, but after 25 years of a relationship with her bank, was told she could not borrow from the financial institution because of the nature of her business.
While Chairman Gruenberg admitted it was wrong for the FDIC to arbitrarily stop a financial relationship between a legitimate business and a bank, government officials who pressured the banks to cease extending lines of credit to “high-risk” legitimate vendors have not been held accountable for their actions. ##
(Image credit: U. S. House of Representatives Financial Services Committee)
Article submitted by Matthew J. Silver to Daily Business News-MHProNews.