Gun Retailers Are Accusing the Obama Admin. of Using 'Covert' Tactic to 'Combat the Second Amendment

"There is a determined effort..."

A man takes aim with a Thompson .45 long gun at the 143rd NRA Annual Meetings and Exhibits at the Indiana Convention Center in Indianapolis, Indiana on April 25, 2014. AFP PHOTO / Karen BLEIER KAREN BLEIER/AFP/Getty Images

A growing number of gun retailers say they are being frozen out of business by a slew of new banking regulations imposed by the Obama White House.

A gun enthusiast checks out a scope at the143rd NRA Annual Meetings and Exhibits at the Indiana Convention Center in Indianapolis, Indiana on April 26, 2014. Tens of thousands are converging on this city in the US heartland this weekend to celebrate American gun culture at the National Rifle Association's annual meeting, part political event and eye-catching display of weaponry. AFP PHOTO / Karen BLEIER KAREN BLEIER/AFP/Getty Images A gun enthusiast checks out a scope at the 143rd NRA Annual Meetings and Exhibits in Indianapolis, April 26, 2014. (Getty Images)

The complaint stems from the Obama administration in 2011 ordering federal regulators to increase scrutiny on banks and their customers. As a result of this order, the Federal Deposit Insurance Corp. instructed that banks carefully monitor merchants who rely on payment processors such as PayPal.

Merchants who regularly employ payment processors include pornography stores, gun stores and “drug paraphernalia shops,” according to the Washington Times.

At the same time that the FDIC urged banks to reassess their relationships with so-called “high risk” merchants, the Justice Department under Attorney General Eric Holder has been busy with Operation Choke Point, a campaign to probe credit card fraud and payment processors.

So, as a result of pressure from both the Justice Department and the FDIC, some banks have chosen to cut ties with certain merchants, including gun retailers. In some cases, banks have severed ties with gun retailers despite the merchants good standing.

“This administration has very clearly told the banking industry which customers they feel represent ‘reputational risk’ to do business with,” attorney Peter Weinstock told the Washington Times. “So financial institutions are reacting to this extraordinary enforcement arsenal by being ultra-conservative in who they do business with: Any companies that engage in any margin of risk as defined by this administration are being dropped.”

The Justice Department defends the recent pressure on banks, saying in a May 7 statement that it is holding accountable banks “who are knowingly assisting fraudulent merchants who harm consumers.”

“We’re committed to ensuring that our efforts to combat fraud do not discourage or inhibit the lawful conduct of these honest merchants,” the statement added.

But the Independent Community Bankers of America said the federal government has overstepped itself with overly broad regulations.

“While preventing fraud is a top concern for community banks, it needs to be balanced with ensuring that businesses and consumers that operate in accordance with applicable laws can still access payment systems,” association president Camden Fine said in a statement to the Justice Department. “ICBA requests that the DOJ suspend Operation Choke Point immediately and focus its resources directly on businesses that may be violating the law, rather than targeting banks providing payment services.”

The actions of the federal government threatens to “close access to the financial system to law-abiding businesses, because the mere prospect of an enforcement action is sufficient to cause financial institutions to restrict access to their payment systems to only established companies that present low risks,” Fine said.

Here’s a list of some gun retailers who say they have been harmed as a result of new federal regulations, via the Washington Times:

  • T.R. Liberti, owner and operator of Top Gun Firearms Training & Supply in Miami, has felt the sting firsthand. Last month, his local bank, BankUnited N.A., dumped his online business from its service. An explanatory email from the bank said: “This letter in no way reflects any derogatory reasons for such action on your behalf. But rather one of industry. Unfortunately your company’s line of business is not commensurate with the industries we work with.”
  • Black Rifle Armory in Henderson, Nevada, had its bank accounts frozen this month as the bank tried to determine whether any of Black Rifle’s online transactions were suspicious.
  • In 2012, Bank of America suddenly dropped the 12-year account of McMillan Group International, a gun manufacturer in Phoenix, even though the company had a good credit history, the owner said. Gun parts maker American Spirit Arms in Scottsdale, Arizona, received similar treatment by Bank of America, the country’s largest banking institution.

Joe Sirochman, owner of American Spirit Arms, told the Washington Times that the trend of freezing out gun retailers appears to be growing.

“This seems to be happening with greater frequency and to many more dealers,” Sirochmansaid said. “At first, it was the bigger guys — gun parts manufacturers or high-profile retailers. Now the smaller mom-and-pop shops are being choked out, and they need their cash to buy inventory. Freezing their assets will put them out of business.”

Kelly McMillan, owner of McMillan Group, said that after his company explained what happened with Bank of America, several smaller gun retailers approached him with similar stories.

“Four generations of my family have been in this industry. This is my way to give back,” he said. “This is an attempt by the federal government to keep people from buying guns and a way for them to combat the Second Amendment rights we have. It’s a covert way for them to control our right to manufacture guns and individuals to buy guns.”

Bank of America denied that it had severed ties over the nature of McMillan’s business.

“We would not deny banking services to an organization solely on the basis of its industry,” the bank said in a statement to the Times.

Still, the recent actions by the Obama administration and its pressure on the banking sector has have been disturbing, said Sen. David Vitter (R-La.), a sitting member of the Senate Committee on Banking, Housing, and Urban Affairs.

“There is a determined effort from [the Justice Department] to the regulators to cut off credit and use other tactics to force [payday lenders] out of business,” he said. “I find that deeply troubling because it has no statutory basis, no statutory authority.”

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