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A panel at American Banker's Regulatory Symposium about the Department of Justice program featured a spirited debate about whether it is prudently fighting fraud or cooling banks' relationships with legal businesses.
September 22 -
Financial institutions and industries targeted by Operation Choke Point should expect to see a dramatic increase in the issuance of administrative subpoenas or civil investigative demands.
August 22 -
More U.S. banks are dropping Somali money transmitters as regulators crack down on the risk of terrorist financing at remittance houses serving the war-torn East African nation. Banks are familiar with regulatory tight spots, but rarely do their responses have life and death consequences, as is the case here.
August 29 -
WASHINGTON The Federal Deposit Insurance Corp. said Monday that it has withdrawn a list of merchant categories, including payday lenders, debt consolidation firms, pornography businesses and others, that it said warranted heightened attention by banks processing their transactions.
July 28
A trade group for payment processors is accusing the Federal Deposit Insurance Corp. of improperly pressuring banks to cut ties with merchants in the pornography business.
In a
The examiners' push happened shortly after the FDIC's release in 2011 of a list of industries that it said warranted heightened attention by banks, according to the court papers. The list of industries included pornography, ammunition sales, payday lending, purveyors of racist materials, dating services, Ponzi schemes and coin dealers.
Complaints that banks have been ending their relationships with people in the porn industry as a result of regulatory pressure
"FDIC examiners' targeted enforcement against the pornography industry was the advent of its improper practice of moralistic regulation over the banking industry," the filing argues. "Regulators did not target the pornography industry because there was evidence of fraud relative to that industry."
FDIC spokesman David Barr said in an email that the agency does not comment on active litigation.
The FDIC
The payment processors' allegations were part of a friend-of-the-court brief filed in support of a payday lending trade group that sued federal banking regulators in June.
The suit, filed by the Community Financial Services Association of America, accuses the FDIC, the Office of the Comptroller of the Currency and the Federal Reserve Board of trying to drive payday lenders out of business by exerting pressure on the banks they depend on to access the payment system.
In response to the suit, lawyers for the FDIC
