Case Status: Settled on Favorable Terms
Community Financial Serv. Assoc. of America v. FDIC
- Due Process
FDIC Settles in Operation Choke Point Lawsuit
Earlier this year, the FDIC agreed to a settlement in a lawsuit over the Obama-era initiative, Operation Choke Point. The FDIC initiative pressured banks not to deal with certain types of legal businesses that were categorically identified as “high risk.” As a result of Operation Choke Point, many legal businesses were denied access to the banking system, merely because their industries were disfavored.
So, what kinds businesses did Operation Choke point end up targeting? CIR’s amicus brief pointed to some of the “high risk” businesses that were affected. Brian Brookman lost his business account with J.P. Morgan for his pawn shop and rare coin dealership, because those two activities were deemed “high risk.” Steven Stratford’s accounts with Chase Bank and Horizon Community Bank were cancelled when it was determined that operating a payment processing company for law firms in the debt relief field was too “high risk.” Sandra Perry had to travel 80 miles to find a bank that would give her an account for her cash loan and car title loan business. Though it had received an A+ rating by the Better Business Bureau, all the local banks and credit unions deemed her business too “high risk.”
Five years after litigation commenced, the parties have reached a settlement agreement. The FDIC agreed to issue a statement to reiterate its official policies, which preclude “regulatory threats, undue pressure, coercion, and intimidation.” The FDIC has already acknowledged that certain employees acted inconsistently with its policies. Further, the FDIC has instituted a new round of employee training. The training program will specifically address Operation Choke Point, and the training materials will be reviewed by the plaintiffs to this case.