WASHINGTON — The House voted Thursday on legislation to make it more difficult for banking regulators to demand that banks shutdown certain business accounts.
Proposed by Missouri Republican Rep. [crscore]Blaine Luetkemeyer[/crscore], the House legislation passed 265 to 159 and is designed to target the Obama’s administration’s “Operation Choke Point,” a Justice Department effort to require businesses to stop banks from working with certain businesses.
These businesses include lawful firearms dealers, payday lenders, escort services and other companies. The Washington Post noted that while the Justice Department cut off financial services to certain industries, it encouraged banks to provide services to others like illegal marijuana sales.
Additionally, The Post pointed out, the Federal Deposit Insurance Corporation (FDIC) does not list abortion clinics, radical environmental groups or marijuana shops as businesses to target.
Scott Simpson, a financier who is affiliated with the bank Gemini Southern, told The Daily Caller last month that the banking restrictions placed on the firearms industry is unduly “onerous” and most banks would rather not have such red tape.
“What we discovered is there are extremely onerous restrictions that have been put on the banks–either through the fed or the government or both that require them to do an extraordinary amount of due diligence and paperwork, which ultimately prevents [the banks] from deciding to go ahead with [a transaction],” Simpson said.
He explained, “They just say it’s just too much of a hassle. So, effectively, one can sort of extrapolate that the anti-gun element out there or trying to attack the gun industry through its lifeblood, which is its financing and the market as well as through oblique means such a ammunition restrictions and stuff like that, rather than go directly at guns, which hasn’t been that successful for them, they do it through an oblique fashion.”
The Competitive Enterprise Institute recommended two steps that were included in the House bill.
First, the law would “Prevent supervisory agencies, including the Federal Reserve, which houses the Consumer Financial Protection Bureau (CFPB), from ordering the closure of a banking account without material reason. (Note that Choke Point involved allegations of ‘reputational risk.’)”
Second, the law would “Amend the Financial Institutions Reform, Recovery, and Enforcement Act (FIRREA) to ensure that federal agency subpoena power could not be used in fishing expeditions.”
The National Rifle Association applauded the bill and released a statement Thursday saying:
“Congressman Luetkemeyer’s legislation puts an end to the Obama administration’s unwarranted attacks upon a legal and thriving sector of the American economy, said Chris Cox, executive director of NRA’s Institute for Legislative Action. On behalf of the NRA’s 5 million members, I’d like to thank Congressman Luetkemeyer for his steadfast support of the Second Amendment and congratulate him on the passage of H.R. 766.”
“To wake up one morning and find out that your bank account, your access to funds have been choked off by an oppressive federal government, lawlessly, has to be stopped,” House Financial Services Committee Chairman [crscore]Jeb Hensarling[/crscore] told reporters.
According to Simpson, J.P. Morgan, Chase and Bank Of America have no appetite for anything in the firearms sector right now. “Wells Fargo seems to be the only large bank that we talk to that is still doing business and adding new business in the industry,” he said.
President Obama has a veto pen ready for the bill, but 24 House Democrats defied House Minority Leader [crscore]Nancy Pelosi[/crscore], who urged her members to oppose it. Massachusetts Democrat Sen. [crscore]Elizabeth Warren[/crscore] slammed the bill on the upper chamber’s floor Wednesday, arguing that the government will not be able to build cases against those who engage in fraudulent or corrupt businesses.