Justice Department Ends 'Operation Choke Point'

Justice Department Ends 'Operation Choke Point'
Rhett Pardon

WASHINGTON — The Justice Department has decided to end a controversial Obama-era program, “Operation Choke Point,” which discouraged banks from doing business with “elevated-risk” merchants.

In a letter sent to House Judiciary Chairman Bob Goodlatte, assistant Attorney General Stephen Boyd referred to the program as “a misguided initiative" and also said that banking regulators with the FDIC subsequently rescinded a list of “high risk” businesses.

Under Operation Choke Point, the Justice Department tried to encourage federally regulated banks to avoid doing businesses with certain get-rich-quick schemes, payday loan services and pyramid schemes. But the list of types of companies did not stop there; it also included pornography businesses, which typically involve constitutionally protected speech. 

Industry attorney Lawrence Walters of Walters Law Group on Saturday said that Operation Choke Point “was a misguided governmental attempt to impose morality by denying lawful but disfavored businesses access to basic banking services.”

“Adult entertainment companies and performers suffered as a result of this effort,” Walters told XBIZ. “It should have never happened and was of dubious constitutionality. Hopefully we will not see any similar programs in the future now that Operation Chokepoint has ended.”

Republicans in Congress last month sent letters to the Justice Departmen urging it to discontinue the program, saying complaints were mounting. They asked for an official statement saying Operation Choke Point was no longer in effect.

On Thursday, Boyd sent a letter to Goodlatte, the chairman of the Committee on the Judiciary in the House of Representatives, saying that the program “is no longer in effect, and it will not be undertaken again.”