McHenry, Luetkemeyer Demand Regulators Protect Americans’ Access to Financial System from Government Overreach

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Cmte Financial Services (R)
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McHenry, Luetkemeyer Demand Regulators Protect Americans’ Access to Financial System from Government Overreach

Washington, Mar 1 -

Today, the top Republican on the House Financial Services Committee, Patrick McHenry (NC-10), and the top Republican on the Subcommittee on Consumer Protection and Financial Institutions, Blaine Luetkemeyer (MO-03), sent letters to the federal prudential regulators seeking answers on efforts to protect Americans’ access to our financial system.

Following Canada’s unprecedented use of emergency powers to freeze hundreds of bank accounts, the Republican Leaders demand that the agencies take action to ensure the federal government cannot abuse its authority to regulate the financial system—including blocking lawful businesses or individuals engaging in constitutionally-protected activities from accessing our financial system.

Read the full letter to the Office of the Comptroller of the Currency (OCC) here, the letter to the Federal Deposit Insurance Corporation (FDIC) here, the letter to the Federal Reserve Board (Fed) here, and the letter to the Treasury Department here.

Read key excerpts from the letters:

“The Obama Administration launched ‘Operation Choke Point’ to apply pressure on financial institutions to cut off financial services to certain licensed, legally operating industries. After years of congressional investigations and civil litigation, the record with respect to Operation Choke Point is clear: political appointees and bureaucrats at the Justice Department and several independent federal agencies used threats to force banks to terminate their relationships with politically disfavored businesses. What remains unclear is whether those agencies have taken steps to ensure the federal government cannot abuse its authority to regulate the financial sector in other ways.

“As you know, in Operation Choke Point, the Federal Deposit Insurance Corporation (FDIC) and the Department of Justice used their respective supervisory and law enforcement authorities to shut down legal businesses. FDIC officials, for instance, informed banks that the government considered certain types of their customers “high risk,” which implied the FDIC would conduct extra audits or investigations and invoked the possibility of additional operating restrictions or civil and criminal charges. Those risk determinations were initially predicated on federal anti-fraud authorities; the FDIC subsequently claimed the accounts in question implicated anti-money laundering statutes. Predictably, several financial institutions severed their relationships with those customers in response to the FDIC’s pressure.

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“There are, however, other forms of leverage and financial surveillance that the federal government can use to chill constitutionally protected activities. For instance, in Canada, Prime Minister Justin Trudeau declared a national emergency and instructed banks and other financial services providers to freeze accounts associated with any person attending an illegal protest or providing supplies to demonstrators. Pursuant to the Prime Minister’s emergency order, any suspicious transactions must also be reported to the Financial Transactions and Reports Analysis Centre of Canada (FINTRAC).

“The United States has a similar framework of authorities available to the President pursuant to an emergency declaration, including an extraordinary set of anti-terrorism powers designed to target bank accounts associated with designated entities and individuals. But it is unclear whether there are guardrails in place to prevent the Executive Branch from misusing those tools to achieve extra-judicial domestic policy objectives.

“These concerns are heightened by the fact that the Biden Administration has resisted the implementation of regulations to do just that. In November 2020, the Office of the Comptroller of the Currency (OCC) released a notice of proposed rulemaking that would prohibit national banks and federal savings associations from categorically declining to provide financial services to industries engaged in lawful business activities. In one of its first official acts, however, the Biden Administration “paused publication” of the rule on January 28, 2021, and U.S. financial services providers may accordingly cut off politically disfavored customers in response to public pressure, or for no reason at all.”

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