WASHINGTON — The Republicans on the Senate Banking Committee are calling on the Federal Deposit Insurance Corp. to ensure that legal businesses have access to financial services, after senior agency officials were revealed to have previously verbally directed staff to discourage banks from doing business with certain industries.
In a letter to FDIC Chairman Jelena McWilliams, the Republican senators, led by Senate Banking Committee Chairman Mike Crapo, R-Idaho, said that the issue reinforced the challenges of ending an Obama-era Justice Department policy, known as Operation Choke Point, which investigated banks that did business with firms that were disfavored by the administration but were legal, including firearms firms, pawn shops and payday lenders.
“Operation Choke Point, and its associated culture and Choke Point-like regulatory actions, must end once and for all,” the senators wrote. “This abuse of government power is antithetical to the best interests of the banking industry, the U.S. economy, and the consumers who rely on banking products and services.”
The senators added that “it is not appropriate for the staff at the FDIC to communicate policy through verbal ‘recommendations.’”
They are asking McWilliams if it is the official position of the FDIC that lawful businesses should not be targeted by the agency for operating in industries that the Obama administration disfavored. The letter also wants to know what the regulator is doing to make sure that bank examiners are aware of the policy.
Additionally, the senators asked if there were communications explaining supervisory expectations of “elevated risk” or “high risk” merchants with regulated banks that would qualify as a “rule” under the Congressional Review Act, but were not properly submitted to Congress.
And they said they are concerned that the FDIC's actions are inconsistent with its communications of policies to regulated institutions, and asked McWilliams what the regulator is doing to address that issue.
The letter comes after Rep. Blaine Luetkemeyer, R-Mo., a senior member of the House Financial Services Committee,
