Washington, D.C. (April 8, 2014)—The Independent Community Bankers of America® (ICBA) today told Congress that the Department of Justice’s broad and overly aggressive enforcement tactics under its “Operation Choke Point” initiative undermine its effectiveness and create serious risks to consumers and the economy. In a coalition statement to the House Financial Services Committee and in a letter to the Justice Department (DoJ), ICBA wrote that holding payment processors and financial institutions responsible for the actions of companies engaged in higher-risk, but legal, activities could have unintended consequences on consumers.
“While preventing fraud is a top concern for community banks, it needs to be balanced with ensuring that businesses and consumers that operate in accordance with applicable laws can still access payment systems,” ICBA President and CEO Camden R. Fine wrote in a letter to Assistant Attorney General Stuart F. Delany. “ICBA requests that the DoJ suspend Operation Choke Point immediately and focus its resources directly on businesses that may be violating the law, rather than targeting banks providing payment services. DoJ should also allow the marketplace to further implement a coordinated, targeted approach to controlling fraud and bad actors.”
In his letter to Delany, Fine noted that the current regulatory environment, which includes the prudential banking agencies, the Federal Trade Commission as well as the Consumer Financial Protection Bureau, is sufficient to ensure that banks implement sound risk management and mitigation, responsive fraud prevention and detection, and adequate consumer protections.
In today’s statement to the House Financial Services Committee, ICBA and a coalition of other financial trade groups noted that Operation Choke Point:
imposes ill-considered and costly mandates on payment systems, which will ultimately result in higher prices and reduced services for consumers,
threatens to close access to the financial system to law-abiding businesses, because the mere prospect of an enforcement action is sufficient to cause financial institutions to restrict access to their payment systems to only established companies that present low risks, and
disrupts commerce, which could have adverse economic consequences, especially for the growth of e-commerce.
ICBA looks forward to continuing its work with the Justice Department and Congress to address its concerns with this initiative.
The Independent Community Bankers of America®, the nation’s voice for nearly 7,000 community banks of all sizes and charter types, is dedicated exclusively to representing the interests of the community banking industry and its membership through effective advocacy, best-in-class education and high-quality products and services.