The House Committee on Oversight and Government reform has compiled a scathing report on the Department of Justice's “Operation Choke Point” program that critics believe is aimed at “targeting industries deemed objectionable” by the Obama administration.
The report, released Thursday by panel chairman Darrell Issa, R-Calif., accuses the Justice Department of abusing its authority by going after the payday lending industry and other merchants and working to put them out of business.
According to the report, the Justice Department “secretly” discouraged banks from conducting business with groups deemed to be “high risk,” for triggering a federal investigation.
The program, according to Issa’s report, has “forced” banks to end relationships with many legitimate businesses, in particular internet payday loan companies.
The operation is being used to target a widening list of businesses that fall under the high risk label, the report found, and could eventually be utilized to stop merchants who sell firearms, credit repair services, dating services, coins, pharmaceuticals and even magazine subscriptions from obtaining financial services from banks.
These businesses have been found by the Federal Deposit Insurance Corporation to be conducting “high-risk activity.”
The House report quoted an internal Obama administration memo in which “senior officials” acknowledged Operation Choke Point was hurting the payday loan industry but said that eliminating such businesses would be a “significant accomplishment” for consumers.
Payday loan businesses have been criticized for luring in desperate borrowers with high-interest loans that often leaves them in perpetual debt.
The report accuses the Justice Department of acting without legal authority, because only private banks and loan companies are involved and not federal institutions.
According to documents obtained by the committee, the Justice Department has “radically and inappropriately expanded its own authority” to conduct the operation.
The report names four banks, including Bank of America, which have recently stopped doing business with payday lending groups.
Hancock Bank cited “heightened scrutiny required by our regulators” in terminating an account with a payday lending business.