WASHINGTON — The Department of Justice and the Federal Deposit Insurance Corp. have agreed to launch preliminary investigations into Operation Choke Point.

The Justice Department's Office of Professional Responsibility and the FDIC's Inspector General responded to a request by House Republicans last month that the agencies look into the controversial law enforcement program to crack down on consumer fraud by focusing on bank and payment processor relationships.

"The correspondence I received from the FDIC and DOJ is a great first step in ensuring that those responsible for Operation Choke Point are held accountable and that Congress and the American people receive details and answers they deserve," said Rep. Blaine Luetkemeyer, R-Mo., one of the letter's organizers, in a press release.

Critics of the initiative argue that it is politically motivated and has chilled legitimate business activity for some industries that have come under scrutiny, like payday lenders and gun dealers.

Robin Ashton, counsel in the Justice Department's Office of Professional Responsibility, said in a Nov. 12 letter that the office will examine allegations that officials involved in Operation Choke Point "abused their authority to conduct investigations" under the Financial Institutions Reform, Recovery, and Enforcement Act.

Still, a spokesperson for the Justice Department downplayed the agency's decision to look into concerns as first steps, underscoring that the office handling the investigation "has opened a preliminary inquiry only."

"As they note in their letter, they will first determine jurisdiction and then whether there is a basis to open an actual investigation," the spokesperson added.

Fred Gibson, FDIC's principal deputy inspector general, said in his Nov. 7 response to Luetkemeyer that his office would examine specific allegations that a senior FDIC official lied in testimony before the House Financial Services Committee, along with more general concerns over whether "FDIC's supervisory activities related to Operation Choke Point" were "consistent with applicable laws, regulations and policy, and with the mission of the FDIC."

Rep. Darrell Issa, R-Calif., chairman of the House Oversight Committee, spearheaded a fight this summer by charging that Richard Osterman, acting general counsel at the FDIC, was not truthful in testimony in which he repeatedly downplayed the agency's involvement in Operation Choke Point.

A spokesperson for the FDIC's IG said the office had no comment at this time.

 

Subscribe Now

Authoritative analysis and perspective for every segment of the payments industry

14-Day Free Trial

Authoritative analysis and perspective for every segment of the industry