by Iain Murray
Competitive Enterprise Institute
July 31, 2014
Issue Analysis
Can the government shut down legal but politically disfavored businesses? The Department of Justice, Office of the Comptroller of the Currency, and Federal Deposit Insurance Corporation are colluding on an operation that is ostensibly aimed at reducing the chances of Americans falling victim to fraud in a variety of “high-risk” industries, predominantly payday lending. It uses existing regulatory powers to provide heightened supervision of banks that do business with these industries. Dubbed “Operation Choke Point,” this undertaking is worrisome for a number of reasons – there is nothing illegal about most of these industries, but because they have been deemed high-risk, banks are cutting ties with them. This opens an entirely new avenue for abusive regulation – a conservative administration, for instance, could just as easily cut off the financial lifeblood of medical marijuana dispensaries or abortion clinics. Until that potential for abuse is curbed, Congress should deny funding to Operation Choke Point.



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