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Beyond guns, Operation Choke Point targets coin dealers, tobacco and pay day lenders

Beyond guns, Operation Choke Point targets coin dealers, tobacco and pay day lenders

Capitol Hill conservatives are coming to realize that Operation Choke Point, President Barack Obama’s program to use banking and financial services regulations to shut down gun and ammunition businesses is actually a wider program with wider ambitions.

Operated by the Department of Justice, Choke Point has its roots in the concerns by regulators at both the Federal Deposit Insurance C and the Federal Reserve about electronic transactions passing through the ACH, or Automated Clearing House, by third-party-payment-processors. Among the chief concerns are how to resolve refund requests based on fraud and how to trace and freeze funds that are part of an illegal enterprise.

Intent on scaring banks, the FDIC published a list of “high-risk” businesses with clear message that financial institutions looking to curry favor with regulators with back out of any transactions on the high-risk list.

Products or services on the list include, fireworks, prostitution, racist materials and cable box descramblers.

Obama was able to target firearms and ammunition businesses by adding them to the high-risk list, in effect blocking their access to mainstream financial services.

The thing about this kind of list is that businesses that are based on fraud or illegal activity keep their mouths shut. But, guns and ammunition are still legal in America and there are built in, um, incentives, not to conduct fraud.

When conservatives first caught wind of Choke Point, they saw it as an attack on gun rights. Led by Sen. Randall H. “Rand” Paul (R.-Ky.), conservatives, through appropriations language, are working to give the firearms sanctuary.

Now there is the matter of other legal businesses on the list. Legal products or services on the list include coin dealers, online dating sites, tobacco and pay day lenders.

Pay day lenders are especially interesting, because they are in direct competition with credit unions, who have long lobbied to outlaw their competitors, and liberal activists that use the micro-lending business to build its political organization.

The best example is the Center for Responsible Lending, an associated advocacy entity owned by North Carolina-based credit union Self Help. Self Help is run by its founder Martin Eakes, who has the same stature in liberal circles as Sen. Elizabeth Warren (D.-Mass.) for his progressive ideas and advocacy. Both CRL and Self Help purport to advocate for the poor, but are in fact tax-protected and tax-financed agents provocateurs for the liberal agenda.

In fact, when Choke Point broke through into the mainstream media, CLR signed a liberal coalition letter defending the program and calling on the Obama administration to double-down on shutting down pay day lenders

David Beck, a spokesman for Self Help, said he looked forward for the day when the pay day lenders were gone, and then the emergency expense services now provided by the pay day lenders would be provided by credit unions.

It is hard to understate how active CRL and Self Help have been on Capitol Hill and inside federal offices pressing the liberal agenda. They have spent more than $5.2 million on Washington lobbyists including paying a former congressman and the wife of a Congressman to lobby, since 2006, according to paperwork filed with the Clerk of the House of the Representatives.

These payments include:

This financial swag is expensive, but not beyond the means of CRL and Self Help. While CRL reports assets of $1.5 billion, it has received $12 million in stimulus funds from the federal government.

Another one of Self Help’s subordinate entities, Self Help Ventures, receives zero-interest loans from the Small Business Administration, which it then micro-loans out those funds at interest rates as high as 4.5 percent.

Self Help Ventures has made more than $200 million in profits since 1997, turning over $468 million in revenues for a profit margin of roughly 40 percent, if the entity was taxed as its competitors.

Operation Choke Point was exposed because it was hijacked by the Obama Administration to go after gun owners and the firearms industry.

Now, Capitol Hill conservatives are awakening to Choke Point’s larger role, not just picking winners and losers in the marketplace, but attacking competitors to the Center for Responsible Lending, an ACORN-like financial organization. The CRL builds its relationships in economically-distressed communities, collecting favors and distributing favors, collecting federal grants and loans and distributing grants and loans—as well as political contributions and hefty lobbying fees.

The Republican leadership cannot be relied upon to go after CRL and Self Help because it was fears any accusation of being against the poor. It that turns out to be true, it is a poor decision.

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