"Operation Choke Point" Raises Alarms

For the last several days, rumors have been circulating about the use of federal financial services regulators to harass and intimidate banks and financial service providers who maintain relationships with legal but so-called "high risk" merchants or businesses. These businesses are said to include, among others, payday lenders, escort services, producers of pornography, gaming interests, and purveyors of drug paraphernalia. By leaning on the banks, so the theory goes, the regulators will cause them to sever relationships with these businesses, thereby choking off their cash flow and forcing them out of the market. While the early phase of the operation has reportedly focused on payday lenders and pornography interests, eventual targets are said to include sellers of firearms and ammunition.

We have been aware of this story for some time. NRA News, for example, originally reported on it last January. Breitbart news also noted in January that Rep. Darrell Issa (R-CA), Chairman of the House Oversight and Government Reform Committee, and Rep. Jim Jordan (R-OH), Chairman of the Economic Growth Subcommittee, sent a letter to Attorney General Eric Holder demanding further information on the program. In a follow up story on NRA News in April, Andrew Langer from the Institute for Liberty reiterated the allegations and reported that the program is expanding. The House Committee on Financial Services additionally held a hearing on April 8 entitled, "Who's in Your Wallet: Examining How Washington Red Tape Impairs Economic Freedom," at which concerns over Operation Choke Point were expressed by both sides of the aisle.

In addition to these concerns, NRA is aware of episodes in which banks have severed their relationships with customers in the firearm industry, as well as the policies of various online services – such as Google Shopping, eBay, Craigslist, and PayPal--to refuse to host listings for, or process sales of, firearms or ammunition.

We know as well that various anti-gun groups have taken their cause to the private sector with varying degrees of success. Indeed, as we have reported, this is a niche that is actively being pursued by Michael Bloomberg's recently-acquired (and ponderously named) anti-gun franchise, Moms Demand Action for Gun Sense in America. In March, NRA successfully defeated a Bloomberg-backed effort to remove firearm-related content from Facebook. Meanwhile, anti-gun mayors have floated plans to use city contracts to impose their gun control wishes, usually with instant pushback from their own police forces. Some public pension plans have also begun divesting themselves of publicly-traded companies related to firearm or ammunition.

Gun control proponents, having achieved only limited success in the legislative arena, have without question sought additional avenues for restrictions through the business community. While all of these developments deserve close attention, we have not substantiated that they are part of an overarching federal conspiracy to suppress lawful commerce in firearms and ammunition, or that the federal government has an official policy of using financial regulators to drive firearm or ammunition companies out of business. This in no way diminishes, however, the real and continuing threats gun owners face from politically unaccountable federal bureaucrats – whose actions we have recently reported on here, here, and here – or the need for consumers to be aware that their own behavior and spending habits can influence decisions businesses make about firearms.

Rest assured, NRA will continue to monitor developments concerning Operation Choke Point and report on any significant activity of concern to gun owners. The Obama administration's record--which includes the Fast & Furious scandal, a federal firearm registration scheme, and a reversal of U.S. policy leading to the signing an international gun control treaty – certainly provides no reason for confidence. Yet whatever the administration might have in store for the future, the firearm industry for now is experiencing robust sales and growth, a reflection of America's rejection of the gun ban agenda.

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Additional Information:

Washington Times - ‘High risk’ label from feds puts gun sellers in banks’ crosshairs, hurts business

UPDATE May 29, 2014: NSSF Issues Statement on 'Operation Choke Point'

NEWTOWN, Conn. -- The National Shooting Sports Foundation (NSSF) today issued the following statement:

The National Shooting Sports Foundation has been investigating the possible role of the federal government in influencing banks in their lending and business banking relationship decisions regarding companies in our industry. We have heard from several industry members that they had banking relationships terminated by their lending institutions.

We respect the right of financial institutions to make business decisions based on objective criteria. It is unacceptable, however, to discriminate against businesses simply because they are engaged in the lawful commerce of firearms, an activity protected by the Second Amendment.

NSSF staff has met with members of the House Financial Services Committee and members of the Oversight and Government Reform Committee concerning several documents that have surfaced from the FDIC labeling companies in the firearms and ammunition industry as "high risk."

As a result, we have worked with U.S. Rep. Blaine Luetkemeyer (R-MO) and expect that he will offer today an amendment to the FY15 Commerce, Justice, Science and Related Agencies Appropriations Bill, which would prevent federal funds from being used as part of "Operation Choke Point" or in any effort targeting companies involved in the lawful commerce in firearms.

We will continue to investigate the extent of any improper government involvement and will update our members as more information becomes available.