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The agency announced Wednesday it had filed a massive lawsuit against more than a dozen debt collectors, payment processors and related entities that the agency said failed to detect fraudulent collection tactics. By including processors in its suit, observers said the CFPB's move resembles the Justice Department's Operation Choke Point.
April 8 -
The Justice Department has come under fire in recent months for its efforts to root out consumer fraud through banks, but Operation Choke Point appears to be gaining new momentum.
March 12
WASHINGTON Top Republicans on the House Financial Services Committee are asking federal regulators to cease all activity related to the Justice Department's Operation Choke Point and any related investigations.
The request, issued in a letter dated Wednesday, comes on the heels of a Consumer Financial Protection Bureau lawsuit against payment processors and debt collectors announced the same day the agency's most extensive legal challenge using the same tactics as the law enforcement initiative.
House Republicans are asking regulators to "disclaim" all "past, present and future involvement in Operation Choke Point or any similar operation," according to the letter, sent to heads of the CFPB, the Office of the Comptroller of the Currency, the Federal Reserve and the National Credit Union Administration.
Supporters of the program says it's aimed at "choking off" fraudsters using the payments system, but critics argue it puts too much of a burden on banks and chills legitimate business activity.
The Federal Deposit Insurance Corp. told banks in January that they should carefully evaluate the businesses they contract with, but clarified that they shouldn't cut out entire industries in doing so.
The House lawmakers' April 8 letter asks the other banking agencies to explain how they recommend and order financial institutions to terminate accounts with certain businesses, suggesting the process should be similar to the FDIC's guidance.
"The Financial Services Committee will continue to investigate this matter. Your proactive efforts to require your staff to follow similar guidelines as those issued by the FDIC would help demonstrate to Congress, the public, and the financial institutions that you regulate" that the agencies "take seriously the need for transparency and fairness in examinations," the letter says.
The letter is signed by Reps. Jeb Hensarling, R-Texas, chairman of the banking panel; Scott Garrett, R-N.J.; Randy Neugebauer, R-Texas; Blaine Luetkemeyer, R-Mo.; Bill Huizenga, R-Mich.; and Sean Duffy, R-Wis.
