Although Missouri Congressman Blaine Luetkemeyer made some publicity hay out of the bill he introduced last week (the End Operation Choke Point Act of 2014), it really hasn't got a prayer of proceeding, much less passing. It would prevent federal bank and credit union regulators from prohibiting, restricting, or discouraging a bank or credit union from providing a product or service to any entity that meets one of three safe harbors: (1) is licensed and authorized to offer the product or service; (2) is a registered money services business; or (3) provides a "reasoned legal opinion that demonstrates the legality of the entity's business under applicable law." It's not merely that the definition of "reasoned legal opinion" raises enough questions to fuel a plethora of potential interpretative shenanigans by regulators who want to quash the business, it's the fact that legislative attempts to limit regulatory enforcement discretion always bring out the Chicken Littles among the regulatory bodies, who will warn that this is a giant leap off a cliff that leads straight into the abyss. They'll spin it as legislation in support of "bad guys," and they're often in effective in taking that approach. No pol wants to be on record as supporting businesses that later turn out to include a few crooks.
Nice try, though, Rep. Luetkemeyer. Banks appreciate the effort.
I did, however, appreciate the attempt to forbid the regulators from adopting "guidance" regarding the safe harbor. Instead, regulators would have to adopt regulations in accordance with the APA, and afford the opportunity for public comment. Slamming the door on subterranean regulations adopted as "guidance" is something that many banks would love to see extended beyond Operation Choke Point.
Another nice touch is the provision that attempts to restrict the ability of the federal government to use FIRREA's subpoena power to go on fishing expeditions. That one ought to be resurrected in other legislation if this bill (as I expect) goes nowhere.
Finally, the introduction of the legislation gave opponents of Operation Choke Point (whose motto is: "businesses with nothing to hide can always prove that they aren't engaged in criminal activity") another chance to fire a shot across the bow of the Department of Justice.
“In an effort to drive legally-operating, licensed and regulated companies out of business, federal banking regulators in cahoots with the Department of Justice (DOJ) are placing so much regulatory pressure on financial institutions that certain businesses not viewed favorably by the Attorney General and the Administration are eventually choked-off from the financial services they need to survive. That notion goes against the very nature of our free market system,” Luetkemeyer said. “It is time to stop these backdoor attempts by government bureaucrats to blackmail and threaten businesses simply because they morally object to entire sectors of our economy.”
Of more interest is Luetkemeyer's maneuver in late May to insert an amendment into the appropriations bill (see Section 554) that chokes off funds for Choke Point. It passed on a voice vote. While the Senate is controlled by Democrats, and it may not survive in the Senate, the prospect for another budget gridlock battle may, in fact, make that a more potentially lethal weapon for attacking Choke Point. It may boil down to a matter of what and who gets thrown under a bus in last-minute trade-offs to move the DOJ's appropriations legislation through both houses. It's not anything to count on, but in horse-trading, Choke Point may be regarded as a nag to sent to the glue factory so that someone's thoroughbred can survive. Sausage making is a messy business, so you just never know what might be ground up.