The Federal Deposit Insurance Corp. has issued new guidelines to financial institutions that a U.S. congressman said signaled its backing away from a controversial federal probe into financial fraud called Operation Choke Point.
Rep. Blaine Luetkemeyer, R-Mo., issued a statement Wednesday saying that the FDIC was issuing the guidelines after he met with Chairman Martin Gruenberg and Vice Chairman Tom Hoenig earlier that day regarding the Choke Point investigation.
“Not only did the Chairman and the Vice Chairman acknowledge wrongdoing within the organization, but they have accepted many of the policies put forth in my legislation, the Financial Institution Customer Protection Act. I’m pleased that FDIC is implementing these important changes without delay,” Luetkemeyer said.
Operation Choke Point was a federal probe into alleged financial fraud at certain businesses such as payday lenders and gun shops. Last year, several gun dealers reported being dropped by their bank as a result of the probe.
Critics like Luetkemeyer allege the government was trying to punish unfavored businesses by making financial services providers afraid to do businesses with them.
In its Wednesday bulletin, the FDIC told financial institutions that they are “are neither prohibited nor discouraged from providing services to any category of customer accounts or individual customers operating in compliance with applicable laws.”
Instead they were encouraged “to take a risk-based approach in assessing individual customer relationships.”
The bulletin also stated that FDIC examiners must provide “notice in writing” whenever they direct an institution to cut off a customer.
Luetkemeyer called this “a turning point in the fight against Operation Choke Point” but added he will continue to pursue legislation to clarifying the FDIC’s authority.
A spokeswoman for the FDIC had “no comment” on the lawmaker’s comments.
