Operation Choke Point pressures banks to terminate accounts of licensed firearms dealers and other 'high-risk' businesses
Between 2013 and 2017, the U.S. Department of Justice's 'Operation Choke Point' coordinated with the FDIC to pressure banks and payment processors to cut off financial services to industries the agencies labeled 'high-risk,' including licensed firearms dealers, payday lenders, and ammunition retailers. A 2014 House Oversight investigation and a 2015 FDIC Office of Inspector General audit concluded that lawful businesses had been targeted via informal regulatory pressure rather than formal rulemaking. DOJ formally ended the program in August 2017.
Dates: 2013 through formal program termination in August 2017. Individuals and organizations involved: U.S. Department of Justice; Federal Deposit Insurance Corporation (FDIC); numerous FDIC-supervised banks; thousands of licensed firearms dealers and other targeted small businesses; the U.S. House Committee on Oversight and Government Reform. What happened: DOJ launched an initiative branded 'Operation Choke Point' that focused subpoenas and supervisory pressure on banks doing business with industries the agency characterized as fraud-prone. The FDIC published guidance listing categories of 'high-risk' merchants. Banks responded by closing or refusing accounts for licensed firearms and ammunition dealers, payday lenders, and other lawful businesses — often without notice or individualized cause. Affected businesses said the result was that legal, constitutionally protected commerce was being throttled by informal regulatory pressure. Stated reasons: Banks cited 'reputation risk' and regulatory compliance pressure. DOJ characterized the program as targeting consumer fraud. Affected parties' allegations: That the federal government had used FDIC examination authority as leverage to discourage banks from serving legal industries — particularly firearms dealers — bypassing the legislative and judicial process and effectively imposing viewpoint- or industry-based financial discrimination. Outcome: The House Oversight and Government Reform Committee issued a May 2014 report concluding DOJ had 'radically and unjustifiably expanded' a consumer-fraud tool. The FDIC OIG audit (2015) found inappropriate moral judgments embedded in supervisory practice. The FDIC retracted the 'high-risk' list. DOJ formally ended Operation Choke Point in August 2017 under written notice from Assistant Attorney General Stephen Boyd. A 2018 GAO study found residual reluctance among banks to serve firearms-industry customers.