Anti-‘Choke Point’ legislation blocking agency action on accounts gets another go in new Congress

Legislation that would block a federal banking agency – including the federal regulator of credit unions – from ordering a bank or credit union to terminate, restrict or “discourage” a customer account or group of accounts unless certain conditions are present has been re-introduced in Congress.

The legislation, H.R. 189 (the “Financial Institution Customer Protection Act of 2019”) by Rep. Blaine Luetkemeyer (R-Mo., and former chairman of the House financial institutions subcommittee) is a repeat from the last session of Congress. The bill would affect the “appropriate federal banking” agencies – the Federal Reserve, the Federal Deposit Insurance Corp. (FDIC) and the Office of the Comptroller of the Currency (OCC) – and the National Credit Union Administration (NCUA). It was introduced Jan. 3.

The bill is intended to put an end to “Operation Choke Point,” a Department of Justice initiative during the Obama administration intended to investigate banks and the business they do with firearms dealers, payday lenders, and other companies believed to be at higher risk for fraud and money laundering.

The same bill passed the House in the previous Congress by a vote of 395-2; it was also authored by Luetkemeyer.

Under the legislation, the agencies could not order an account closed, restricted or “discouraged” unless certain conditions existed, including: the agency has a valid reason for such an order, and that reason is not based solely on reputation risk; and a threat to national security exists.

Luetkemeyer Reintroduces Legislation to End Operation Choke Point