House Republicans this week asked the Federal Reserve to explain if it has in any way helped the Obama administration implement Operation Choke Point, a secretive program critics say is being used by the Obama administration to quietly shut down companies it doesn't like.
House Oversight Committee Chairman Darrell Issa (R-Calif.), and regulatory affairs subcommittee chairman Jim Jordan (R-Ohio) wrote to Federal Reserve Board Chair Janet Yellen on Thursday to ask if the Fed is playing any role in that program.
Members of Congress are asking Federal Reserve Chairman Janet Yellen if the Fed is playing any role in Operation Choke Point. (AP Photo/Michael Dwyer)
The letter was sent after SunTrust Bank announced it would no longer provide banking services to payday lenders, pawn shops and check cashers "due to compliance requirements." Because the Fed is the primary regulator of banks and bank holding systems, Issa and Jordan said the Fed must tell Congress what role — if any — it is playing in Operation Choke Point.
"In the course of its investigation of Operation Choke Point, the committee has learned that federal regulators are pressuring banks to terminate relationships with legal yet disfavored industries, with our regard to the legitimacy or risk profile of individual companies," they wrote.
"There is evidence that the Federal Reserve Board may be operating in a similar manner," they added. A similar letter was sent to the Comptroller of the Currency, another major bank regulator.
To determine what role the Fed may be playing in the program, the two members asked Yellen and the Comptroller for all documents and communications from 2012 on between the Fed and the Department of Justice, and all items relating to Operation Choke Point that may have been discussed.
They also asked for all documents related to industries such as firearms, payday lenders, check cashing, tobacco and pawn shops.
The Obama administration has said Operation Choke Point as a way to block the access illegal businesses have to the financial system. But critics say it has been used to crack down on these and other businesses that the Obama administration doesn't support.
And while people agree that the activities of any one gun shop or check casher could be illegal, that's not enough of a basis to shut all of these companies out of the banking industry. In September, an Oregon gun maker said it was blocked from processing credit cards, and while it had no direct evidence, it believes it was the latest victim of Operation Choke Point.
Read the letter from Issa and Jordan to Janet Yellen here: