Exclusive: Cruz, Lee Attempt to Take Down Operation Choke Point

UNITED STATES - OCTOBER 16: Sens. Mike Lee, R-Utah, left, and Ted Cruz, R-Texas, make their way to the Senate floor in the Capitol where the Senate voted to end the government shutdown and raise the nation's debt ceiling. (Photo By Tom Williams/CQ Roll Call)
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UNITED STATES – OCTOBER 16: Sens. Mike Lee, R-Utah, left, and Ted Cruz, R-Texas, make their way to the Senate floor in the Capitol where the Senate voted to end the government shutdown and raise the nation’s debt ceiling. (Photo By Tom Williams/CQ Roll Call)

Sens. Ted Cruz of Texas and Mike Lee of Utah plan to introduce a bill today that attempts to unravel the Justice Department’s controversial program Operation Choke Point, The Daily Signal has exclusively learned.

“Under President Obama’s reign, the DOJ has abandoned its longstanding tradition of staying out of politics and has instead become a partisan arm of the White House,” Cruz said. “The Obama administration initiated Operation Choke Point to punish law-abiding small businesses that don’t align with the president’s political leanings. The DOJ should not be abusing its power by trying to bankrupt American citizens for exercising their constitutional rights.”

The bill, called the Financial Institution Customer Protection Act, bans federal agencies that oversee banks from requesting or ordering banks to terminate customer accounts “unless the regulator has material reason.”

The measure also requires banking regulators to put in writing any “formal or informal” requests for account termination, and requires those regulators to file an annual report to Congress regarding those requests. To scale back Operation Choke Point or any similar initiatives, the bill also amends the Financial Institutions Reform, Recovery, and Enforcement Act of 1989.

Under Operation Choke Point, critics believe that government officials abused their authority by pressuring banks to close down the accounts of entire industries the Obama administration doesn’t like, such as firearms sellers and payday lenders.

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“Our right to bear arms—a right granted by God and protected by the Constitution—is fundamental to the protection of all our other rights,” Lee told The Daily Signal in a statement. “An executive branch bent on taking away this right, through any administrative means necessary, is a danger to all Americans. That is why I am proud to co-sponsor the Financial Institution Customer Protection Act, which would end the federal government’s ability to abuse financial regulations to target firearm proprietors like they did during Operation Choke Point.”

An identical version of the bill passed the House of Representatives 250-169 in February with bipartisan support.

According to government documents, Operation Choke Point was designed by the Justice Department in 2012 to “attack Internet, telemarketing, mail, and other mass market fraud against consumers, by choking fraudsters’ access to the banking system.”

The Justice Department carried out the program by using its investigative powers and partnering with federal regulating agencies such as the Federal Deposit Insurance Corporation (FDIC) that provide formal guidance to banks.

Since the program’s inception, many gun sellers, pawn shops, and short-term lenders reported their bank accounts being shut down.

Read More: In Voicemail, Bank Tells Former Police Officer It ‘No Longer Lends to Firearms Dealers’

Last Thursday, one of President Barack Obama’s former top Justice Department officials behind Operation Choke Point said the program had “unintended but collateral consequences” on banks and U.S. consumers.

“Unfortunately, as the investigations continue, so too have one of the unintended but collateral consequences of such vigilance: mass de-risking,” wrote Michael J. Bresnick, who previously served as executive director of Obama’s Financial Fraud Enforcement Task Force, under which Operation Choke Point was created.

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The Daily Signal reached out to the Justice Department for comment on Operation Choke Point, but they have not responded to our request.

In February, when the Financial Institution Customer Protection Act was being debated in the House, the White House issued a veto threat against what the administration called “unnecessary, overly burdensome” requirements.

“Restricting the federal banking agencies in this way could unnecessarily and dangerously hinder or compromise important law enforcement and national security efforts,” the White House said in a statement.

Rachael Slobodien, communications director for Cruz, told The Daily Signal the measure would not hinder any national security efforts. “This bill clearly provides federal banking agencies with the authority to address potential national security threats,” she said.

The bill’s sponsor in the House, Rep. Blaine Luetkemeyer, R-Mo., said in a statement to The Daily Signal that Cruz and Lee’s effort “confirms that Americans, all across the country, are speaking up after been affected by Operation Choke Point.”

He added:

Sens. Lee and Cruz recognize the need for greater transparency in the Department of Justice and federal banking agencies. Operation Choke Point runs contrary to who we are as Americans, and I want to thank the senators for joining me in this effort. I look forward to working with them to encourage the Senate to bring this bill to the floor in the very near future.

If the bill passes the Senate, it will then head to Obama’s desk for approval.

“I am proud to stand with Sen. Lee and Rep. Luetkemeyer to stop this insidious manipulation by the administration and look forward to sending this legislation to the president’s desk,” Cruz said.

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