Gyroscopic Investing

http://dailysignal.com/2015/01/28/exclu ... oke-point/

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.

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.

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.

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.

dualstow wrote: I do feel bad for the coin dealers.

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/

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]