The Justice Department contends that Operation Choke Point combats unlawful, mass-market consumer fraud by “choking”? their access to banking systems. But a report by the House Oversight Committee found the program’s targets, under direction of the FDIC, included legal businesses such as short-term lenders, firearms and ammunition merchants, coin dealers, tobacco sellers and home-based charities.
[...]
Emails unearthed by investigators showed employees scheming to influence banks’ decisions on who to do business with by labeling certain industries “reputational risks,”? ensuring banks “get the message”? about the businesses the regulators don’t like, and pressuring banks to cut credit or close those accounts, effectively discouraging entire industries.
FDIC officials were also seen inserting their personal and moral opinions into banking decisions.
“The FDIC has allowed a culture within their agency to blossom that they believe it’s OK to impose their personal opinions and value system in a regulatory way,”? says Luetkemeyer. “They are not a regulatory police—their job is to enforce the law.”?
[...]
To address concerns raised about Operation Choke Point, the FDIC will now require bank examiners to put in writing any recommendation or requirement for an account termination.
The examiner will also be required to indicate what law or regulation they believe the bank or the customer of the bank is violating.
Imagine that… they'll have to identify what law they say you're breaking before unilaterally terminating your access to the banking system. What progress!
Human behavior is economic behavior. The particulars may vary, but competition for limited resources remains a constant.
- CEO Nwabudike Morgan
The Federal Deposit Insurance Corp. has acknowledged its role in Operation Choke Point and is taking dramatic steps to reverse its policies in targeting legal and legitimate industries that are disfavored by the Obama administration.
It sounds a nightmarish example of abuse of bureaucratic power.
This seems to me yet another reason why we would be better off if banking as we now know it was not our system. If the payment system was disentangled from the lending system, then there would be no need for a FDIC.
I must admit I would like proper laws that prevented telemarketing and payday lenders. They are scum IMO The UK recently curtailed our payday lenders somewhat by imposing a limit that a borrower can't be made to pay more than twice the original loan amount. I think anti-usury laws like that are the way to do it.
Agree with stone about payday/short term lenders. They may be legal but in reality they are little more than predators in an unregulated, buyer-beware "wild west". It's ironic that effective usury laws were more common in the Middle Ages than they are now. But, the solution is to pass laws limiting interest & fees, not to choke off bank accounts - even though Obama probably had the best of intentions to limit the damage of these shady businesses.
One could say the same about state-run lotteries though. I like to refer to them as a "stupidity tax." Although I guess you could argue for them as a form of entertainment.
It wasn't just payday lenders. They targeted porn stars, gun shops, smoke shops, coin shops, and home-based charities. Apparently some Native American tribal leaders are upset about this because a lot of their tribal income comes from these sorts of businesses: http://www.theblaze.com/stories/2015/01 ... vereignty/
Human behavior is economic behavior. The particulars may vary, but competition for limited resources remains a constant.
- CEO Nwabudike Morgan
According to a 60 Minutes piece on legal pot in Colorado, pot businesses have the same problems dealing with banks, turning it into a nearly all-cash business. This law wasn't mentioned but I'm assuming this law has something to do with it.
WiseOne wrote:
One could say the same about state-run lotteries though. I like to refer to them as a "stupidity tax." Although I guess you could argue for them as a form of entertainment.
Like you I'm no fan of state lotteries. In the UK, our national lottery seems to be an engine of cronyism, channeling funds from the poorest/dumbest to pay for either asinine projects devised merely to gather lottery funding (eg https://en.wikipedia.org/wiki/National_ ... ular_Music ) or to fund "high culture" type stuff. I tease my mother saying that she is probably the only person to both buy lottery tickets and to go to lottery funded events .
BUT, I don't think anyone ruins their life by buying lottery tickets. The outlay is wasted but it is always small from each person. I guess it is just the ultimate form of convex risk http://www.scribd.com/doc/73200528/ReTh ... esting-GMO. :-
The options market delivers a payment to investors willing to take downside exposure without upside (selling puts),but charges a payment from those who want upside without the downside (buying calls). And the more asymmetricthe payoff, the bigger the payment gets.
WiseOne wrote:
One could say the same about state-run lotteries though. I like to refer to them as a "stupidity tax." Although I guess you could argue for them as a form of entertainment.
Not everyone is middle/upper class with highly educated skills and on an upward trajectory in life. What other choice do they have? $1 is nothing from an absolute cost basis. I think its a fair thing to give the losers in society a chance. It's no Hunger Games!
But one thing is for sure... you won't ever win if you don't play. No ifs, ands or buts.
Last edited by MachineGhost on Sun Feb 01, 2015 11:02 am, edited 1 time in total.
"All generous minds have a horror of what are commonly called 'Facts'. They are the brute beasts of the intellectual domain." -- Thomas Hobbes
Disclaimer: I am not a broker, dealer, investment advisor, physician, theologian or prophet. I should not be considered as legally permitted to render such advice!
dualstow wrote:
I do feel bad for the coin dealers.
Obama must have lost his marbles and shifted to the right. I can understand porn shops, gun shops, casinos and payday lenders, but coin dealers??? What is risky about that?
"All generous minds have a horror of what are commonly called 'Facts'. They are the brute beasts of the intellectual domain." -- Thomas Hobbes
Disclaimer: I am not a broker, dealer, investment advisor, physician, theologian or prophet. I should not be considered as legally permitted to render such advice!
Pointedstick wrote:
It wasn't just payday lenders. They targeted porn stars, gun shops, smoke shops, coin shops, and home-based charities. Apparently some Native American tribal leaders are upset about this because a lot of their tribal income comes from these sorts of businesses: http://www.theblaze.com/stories/2015/01 ... vereignty/
For some reason, I can't resist making or finding short links: http://bit.ly/1ItS0wC
I guess that aspect of it is complicated by the following, which I found on the wiki page for payday loans:
While some tribal lenders are operated by Native Americans,[64] there is also evidence many are simply a creation of so-called "rent-a-tribe" schemes, where a non-Native company sets up operations on tribal land.[65][66]
Seems like you could use coin shops to launder money. What kind of records do you have to keep about people who come in, buy some coins, and pay cash? Coins are a good way for a drug dealer to hide his savings, or to use as currency with other criminals.
Although if cracking down on money laundering broadly is their interest, I think small restaurants and motels might also be good targets as well. Most small businesses, really.
What progress!
The UK recently curtailed our payday lenders somewhat by imposing a limit that a borrower can't be made to pay more than twice the original loan amount. I think anti-usury laws like that are the way to do it.
