In an article entitled "One Last Gasp from Operation Choke Point?," the American Banker's Kevin Wack relates (paid subscription required) several recent instances where payday lenders have been cut off by their banks due to pressure from the OCC. Readers are well aware of the woes of payday lenders and other businesses unfavored by the progressive ideologues who have been driving the regulatory agenda in D.C. for the past eight years (and earlier, if you count the reign Queen Sheila the RINO at the FDIC). While payday lenders have been in the front of the line for a beating by the bullies at the OCC, FDIC, and FRB, also in the cross hairs have been such allegedly "high risk" businesses as tobacco companies, firearms dealers, and (The Horror! The Horror!) online dating services.
Over the past couple of years, the bank regulators and the Department of Justice, responding to industry and congressional outcry, publicly denied that there was any such thing as "Operation Choke Point," and the FDIC, in particular, took a couple of giant steps backward in its war on "the deplorables." Yet, Wack's article indicates that the OCC may be stepping up its attempts to force national banks to drop payday lenders as customers and, thereby, dry up funding funding sources for such businesses, forcing them out of business. Wack and others speculate that the OCC might want to cause as much damage to the payday lending business as it can before The Perpetual Campaigner is replaced by Generalissimo Donald John Trump next January.
Wack's article discusses the actions of US Bank, one of the nations largest banks, over the past month in dropping Advance America, one of the nation's largest payday lenders, and two other payday lending businesses. Advance America representatives state that four other banking relationships have also been terminated over the past five weeks. Advance America has filed an action in federal court to enjoin federal regulators from "informally pressuring" banks to end their funding relationships with the company.
The OCC refused to comment. However, in a statement filed in another court action filed by another payday lender, Power Finance Texas, the CEO of Business Bank of Texas alleged "that an assistant deputy comptroller in the OCC's San Antonio office recently pressured his $110 million bank to end its relationship" with the payday lender. One unnamed payday industry lawyer speculated that "the banking agencies are acting with renewed urgency prior to the change in administrations." That's probably an accurate speculation.
You have to wonder about the advisability of these recent regulatory actions. The guy at the top of the OCC's food chain, Thomas Curry, can be fired at will, and his term is up next April in any event. It's tougher to prune the vines at the lower levels of the agency, but anyone who thinks that The Orange Man and his flying monkies are not experts at making the daily lives of disfavored minions a living hell from the top on down have not been paying sufficient attention to current and past events. Instead of shutting the payday lending industry down, or causing it fatal harm, it is more likely that all this latest push is doing is raising the profiles of the "assistant deputies" and other Barney Fife-like denizens of various bank regulatory rabbit warrens throughout this great land I like to call " 'Muhrica," and painting big fat bullseyes on their foreheads. Flying under the radar, taking the long view, and making the payday industry eventually bleed out from a thousand small cuts inflicted over an extended period of time no matter who is at the helm of the Titanic would have been the smart play. Instead, these clowns are making themselves prime candidates to be part of the raised-to-the-surface scum that is initially sucked down the drain when the Maximum Leader drains the swamp.
Then again, if they were brilliant, they already would be working for Steven Mnuchin or Wilbur Ross.
So, get in your final, petty, vindictive licks while you can, kids. I hope it's worth it to you, but, I seriously doubt that it will be.