See What This CEO Calls ‘A Bigger Abuse Of Power Than Watergate’
An Ohio financial services company has seen five business relationships severed because of a program being operated by the Department of Justice, claims Ted Saunders, the CEO of Community Choice Financial Inc.
“We had a 20-year relationship terminated directly as a result of regulatory pressure,” Saunders told Columbus Business First. “It’s a bigger abuse of power than Watergate.”
Saunders says that a total of five banks and payment processors cut ties with his company because of Operation Choke Point, a federal anti-fraud initiative being run by the Department of Justice.
“(The companies told me) the only reason we’re dropping you is because regulators showed up last week and told us,” Saunders told Columbus Business First. “I’ve had that conversation absolutely more than once.”
Community Choice Financial is the parent company of several payday lending and check-cashing businesses. One of its brands is CheckSmart, which offers title loans, auto insurance, and tax preparation services.
Critics of Operation Choke Point say that it forces banks to increase their scrutiny of businesses like CheckSmart. Instead of dealing with the prospect of inspection by regulators, the banks and payment processors that help payday lenders move funds will often choose to drop the companies as clients.
The initiative has affected other businesses as well. A number of firearms dealers and adult entertainment companies say their banks have cited increased pressure from regulators for dropping them as clients.
Some critics believe that Operation Choke Point merely has the unintended consequence of hurting legitimate businesses. Others say the pain it inflicts is intentional.
The Community Financial Services Association of America filed a lawsuit earlier this month claiming that 80 banks, including big names like Bank of America and JP Morgan, have dropped payday lenders as clients because of Operation Choke Point. (RELATED: Claim: Federal Program Forced Banks To Drop Arizona Company)
The group says that federal regulatory agencies are applying “backroom pressure” and waging “a concerted campaign” to shut down payday lenders.
“This is the most significant threat to consumer choice and freedom this country has ever seen and it will ultimately fundamentally change the way commerce is conducted in America if it isn’t stopped,” said Brian Wise, senior advisor to the U.S. Consumer Coalition, a group that is spending up to $5 million to fight Operation Choke Point.
One aspect that concerns Wise is that the initiative is a decision of the Executive branch, rather than one coming from Congress or the court system.
It is happening “because of unelected activist administrators in Executive branch agencies who have ingeniously found a way to accomplish their political goals through intimidation and coercion,” Wise told The Daily Caller.
A case in point is an Ohio Supreme Court ruling earlier this month which upheld the right of payday lenders to conduct business in the state.
“Businesses throughout the country and even abroad are having to change the way they do business or stop conducting business altogether,” Wise claimed.
Republican California Rep. Darrell Issa, the chairman of the House Oversight and Government Reform Committee also claims that Operation Choke Point is part of a concerted effort on the part of the DOJ, the Federal Insurance Deposit Corporation, and other federal agencies to target businesses it finds objectionable. He released documents recently which he claims showed that the DOJ and FDIC have been working together on Operation Choke Point, though FDIC officials have said that the initiative is strictly a DOJ program.