House of Representatives Passes Legislation to End Operation Choke Point

The bill, approved by a 250-169 bipartisan vote, prohibits federal regulators from directly or indirectly coercing banks to terminate relationships with legitimate business entities.

The U.S. House of Representatives passed the Financial Institution Customer Protection Act of 2015, which would end Operation Choke Point, in a 250-169 bipartisan vote Thursday. The bill, which ACA International has supported, prohibits federal regulators from directly or indirectly coercing banks to terminate relationships with legitimate business entities “unless the regulator has material reason,” according to bill sponsor U.S. Rep. Blaine Luetkemeyer (R-Mo.)

In April 2015, ACA International’s Board of Directors unanimously voted to support legislation and policy changes that would bring an end to Operation Choke Point. In June, ACA launched a grassroots campaign in which nearly 2,000 members sent emails to a total of 340 members of Congress urging them to end Operation Choke Point.

“After years of remaining steadfast in bringing an end to Operation Choke Point, I am proud that the majority of my colleagues today joined me in casting their votes to ensure this program is brought to a halt and that greater transparency is achieved,” Luetkemeyer said in a statement issued after Thursday’s vote. “Together, the first step has been taken to ensure that federal banking agencies and DOJ can no longer intimidate financial institutions from offering financial services to licensed, legally-operating businesses that have been targeted not because of potential wrongdoing, but because of personal and political motivation.”

Operation Choke Point is a program in which the Federal Deposit Insurance Corporation and Department of Justice reportedly applied pressure to financial institutions in order to cut off financial services to certain licensed, legally operating industries, including debt collection. The House Financial Services Committee passed the Financial Institution Customer Protection Act of 2015 (HR 766) by a 35-19 vote in June 2015.

“Operation Choke Point is an outrage to the American people,” said U.S. Rep. Jeb Hensarling (R-Texas), chair of the House Financial Services Committee. “Fortunately, a number of Democrats on the other side of the aisle have actually joined with our side to say that justice must prevail, that the rule of law must prevail.”

Opponents of the legislation said Thursday that it goes too far in regulating the actions of the FDIC and DOJ to combat bank fraud.

In particular, opponents expressed concerns about a provision of the original bill that would amend the Financial Institutions Reform, Recovery, and Enforcement Act of 1989 to “revise requirements for summoning witnesses and requiring production of books or other records the Attorney General deems relevant or material to a civil investigation in contemplation of a civil proceeding which may result in civil penalties for specified violations.”

Before the final vote, the House approved one amendment to HR 766 from  U.S. Rep. Brad Sherman (D-Calif.) that addressed these concerns about the bill’s reach. The amendment ensures that the original intent of FIRREA stays in place.

“I do not support the part of the bill that blocks FIRREA,” Sherman said. “It is unfortunate that these two bills have been put together into one [and] it’s important that the bill does not have unintended consequences.”

Luetkemeyer addressed Operation Choke Point with ACA members last year at the Washington Insights Conference in Washington, D.C. This year’s Washington Insights Conference, April 20-21 at the Hyatt Regency on Capitol Hill, will be an opportunity for ACA members to follow up on the impact of HR 766 now that it has been approved. ACA members who attend will also have the opportunity to discuss other regulations and laws affecting the credit and collection industry with members of Congress.