Missouri Congressman Aims Two Guns at Operation Choke Point

Never mind that the Democratic administration that created Operation Choke Point is gone, a Republican Congressman wants to be doubly-certain that the controversial program that tries to cut off payment services to fraudulent merchants dies. So he has proposals to kill Operation Choke Point in not one but two bills.

In late May, U.S. Rep. Blaine Luetkemeyer of Missouri introduced a standalone bill, H.R. 2706, The Financial Institution Customer Protection Act of 2017, which would end Operation Choke Point in its present form. The bill is the same one he introduced in the previous Congressional session, which passed the House but went no further.

With little fanfare, Luetkemeyer’s re-introduced proposal also became part of the Financial Choice Act, a Republican bill that would scale back many of the regulations in the Dodd-Frank Act that then-President Barack Obama signed into the law in 2010 in the wake of the financial meltdown that began a decade ago.

While Operation Choke Point had the laudable goal of thwarting fraudulent merchants by having banks deny them access to card networks and other payment services, some business people and their allies in Congress soon began to complain that the program, led by the U.S. Department of Justice, was a way for the Obama Administration to put legal industries it didn’t like, such as payday lenders and telemarketers, out of business. Luetkemeyer has been one of Operation Choke Point’s most vocal critics for several years.

Luetkemeyer’s chances of thwarting Operation Choke Point could be better this year because Republicans now control both houses of Congress and the White House. H.R. 2706 would ban federal regulatory agencies from asking a depository institution to terminate a specific customer account, or group of accounts, unless “the agency has a material reason for such request or order; and … such reason is not based solely on reputation risk,” the bill’s text says.

A Luetkemeyer spokesperson did not respond to a Digital Transactions News request for comment about why he has two anti-Choke Point measures pending at the same time. But he told the online publication The Daily Caller this week that he wants “to see how far it goes” in the Senate, which is now considering the Choice Act following its passage by the House earlier this month. The Choice Act is a big and controversial bill whose chances of becoming law are by no means assured. In fact, in response to heavy retailer lobbying, Republicans retained in the bill Dodd-Frank’s Durbin Amendment that regulates debit cards, despite banker opposition.

“If they [senators] include it in their financial-reform bill, then it won’t be necessary, but we filed a [separate] bill to be able to offer it if we see that the Choice Act is going to stall,” Luetkemeyer said in The Daily Caller of H.R. 2706.

Double-teaming also might ensure that the issue will get a vote in 2017 before Congress turns its attention to the 2018 elections and puts non-urgent matters aside. Even though the current two-year session is only about one-quarter over, with holidays and legislative recesses, Congress is “running out of time, believe it or not,” Scott Talbott, senior vice president government affairs at the Electronic Transactions Association, a national payments-industry trade group based in Washington D.C., tells Digital Transactions News. “There are only a handful of legislative days left.”

Also up for debate is whether legislation is even necessary to kill Operation Choke Point. Republicans are now in charge of the executive branch, and a leader of the program in the Justice Department recently left for private law practice. “I think with the change of regulators under the new administration we can expect to see Operation Choke Point reduced greatly,” says Talbott.

But in a May 25 press release, Luetkemeyer signaled his belief that the force of law is needed to kill Operation Choke Point and prevent similar programs from being created.

“Although there is a new administration and Department of Justice in place, this legislation is necessary to ensure that no future administration will have the opportunity to negatively impact individuals and legal businesses through this unprecedented initiative,” he said.