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	<title>FrontPage Magazine &#187; FDIC</title>
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		<title>Obama&#8217;s &#8216;Operation Choke Point&#8217;</title>
		<link>http://www.frontpagemag.com/2014/arnold-ahlert/obamas-operation-choke-point/?utm_source=rss&#038;utm_medium=rss&#038;utm_campaign=obamas-operation-choke-point</link>
		<comments>http://www.frontpagemag.com/2014/arnold-ahlert/obamas-operation-choke-point/#comments</comments>
		<pubDate>Thu, 18 Dec 2014 05:40:42 +0000</pubDate>
		<dc:creator><![CDATA[Arnold Ahlert]]></dc:creator>
				<category><![CDATA[Daily Mailer]]></category>
		<category><![CDATA[FrontPage]]></category>
		<category><![CDATA[Banks]]></category>
		<category><![CDATA[Discrimination]]></category>
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		<guid isPermaLink="false">http://www.frontpagemag.com/?p=247698</guid>
		<description><![CDATA[Why the administration's crusade against lawful U.S. businesses won't be discontinued anytime soon.  ]]></description>
				<content:encoded><![CDATA[<p style="color: #232323;"><a href="http://cdn.frontpagemag.com/wp-content/uploads/2014/12/fdic.png"><img class="alignleft  wp-image-247700" src="http://cdn.frontpagemag.com/wp-content/uploads/2014/12/fdic-450x310.png" alt="fdic" width="350" height="241" /></a>Almost unbelievably, the Obama administration is involved in another scandalous abuse of power, one that has largely escaped the public’s attention. The House Oversight and Government Reform Committee released a <a href="http://oversight.house.gov/wp-content/uploads/2014/12/Staff-Report-FDIC-and-Operation-Choke-Point-12-8-2014.pdf"><span style="color: #1255cc;">report</span></a> December 8 detailing the abuses by the Federal Deposit Insurance Corporation (FDIC), operating under the auspices of a program known as Operation Choke Point. Run by the Departments of Justice and Treasury, Operation Choke Point was supposed to target illegal businesses and prevent them from obtaining access to the U.S. financial system. Yet damning emails unearthed by investigators <a href="http://dailysignal.com/2014/12/08/these-7-revealing-emails-show-federal-agencies-scheming-to-target-legal-businesses/"><span style="color: #1255cc;">reveal</span></a> regulatory officials were motivated by personal animus toward certain businesses. “It’s appalling that our government is working around the law to vindictively attack businesses they find objectionable,” Rep. Darrell Issa (R-CA), Chairman of the House Oversight and Government Reform Committee, said in a press release.</p>
<p style="color: #232323;">&#8220;Internal FDIC documents confirm that Operation Choke Point is an extraordinary abuse of government power,” Issa. &#8220;In the most egregious cases, federal bureaucrats injected personal moral judgments into the regulatory process. Such practices are totally inconsistent with basic principles of good government, transparency and the rule of law.”</p>
<p style="color: #232323;">Operation Choke Point was <a href="http://www.justice.gov/opa/speech/financial-fraud-enforcement-task-force-executive-director-michael-j-bresnick-exchequer"><span style="color: #1255cc;">publicly introduced</span></a> in March of 2013, when Financial Fraud Enforcement Task Force Executive Director Michael J. Bresnickat bought it up in a speech at Washington D.C.’s Exchequer Club. Bresnickat assured his audience the reason the program was &#8220;focused on financial institutions and payment processors is because they are the so-called bottlenecks, or choke-points, in the fraud committed by so many merchants that victimize consumers and launder their illegal proceeds.”</p>
<p style="color: #232323;">Five months later, the <i>Wall Street Journal</i> <a href="http://www.wsj.com/articles/SB10001424127887323838204578654411043000772"><span style="color: #1255cc;">revealed</span></a> the troubling reality that one of the first targets of the program were payday lending operations. Peter Barden, spokesman for the Online Lenders Alliance, sounded the initial warning, noting government pressure forcing banks to stop payment processing &#8220;would cut off an important credit choice for millions of underserved consumers&#8221; and &#8220;send a troubling message to banks that at any point regulators can force them to stop processing legal transactions simply because they don&#8217;t like a particular merchant or industry.”</p>
<p style="color: #232323;">In January 2014, Issa, along with Economic Growth Subcommittee Chairman Rep. Jim Jordan (R-OH), sent U.S. Attorney General Eric Holder a letter expressing concern that &#8220;both the goal and mechanisms of Operation Choke Point may constitute a serious mismanagement and abuse of the Department&#8217;s FIRREA [Financial Institution Reform and Recovery Act of 1989] authority.”</p>
<p style="color: #232323;">Issa wanted answers. The DOJ felt it was under no obligation to provide them.</p>
<p style="color: #232323;">By the end of May 2014, Issa’s concern had morphed into outrage. He issued a report <a href="http://www.breitbart.com/Big-Government/2014/05/29/House-Committee-Report-DOJ-Must-Disavow-and-Dismantle-Operation-Choke-Point"><span style="color: #1255cc;">contending</span></a> Operation Choke Point was so “flagrantly illegal” it was beyond legal rehabilitation. &#8220;In light of the Department&#8217;s obligation to act within the bounds of the law, and its avowed commitment not to &#8216;discourage or inhibit&#8217; the lawful conduct of honest merchants, it is necessary to disavow and dismantle Operation Choke Point,” the report stated. It further noted that Holder knew about the program prior to its launch, that he knew it was aimed at targeting legal entities—and that he nonetheless fully supported its implementation. Furthermore, the report suggested that once the program became public, the DOJ may have attempted to cover up parts of its operation.</p>
<p style="color: #232323;">It was also discovered that Operation Choke Point had expanded beyond the payday lending industry, targeting manufacturers, distributors, and dealers of firearms and ammunition, as well as coin dealers. And it was also revealed that a January 23, 2014 deadline regarding Issa’s request for information came and went absent any indication the DOJ had fulfilled it.</p>
<p style="color: #232323;">Three days later, <a href="http://myfoxdc.com/"><span style="color: #1255cc;">MyFoxdc.com</span></a> <a href="http://www.myfoxdc.com/story/25668177/holders-gun-grab-via-operation-choke-point"><span style="color: #1255cc;">issued</span></a> a report on Operation Choke Point alleging the program targeted the gun industry because Obama failed to get gun control legislation passed by Congress. If such an effort has a familiar ring, it’s because Obama has employed precisely the same Congress-bypassing tactic with regard to illegal immigration. At that time, The National Shooting Sports Foundation revealed many of its members in the firearms and ammunitions manufacturing industries had had their banking relationships wrongfully terminated by the program.</p>
<p style="color: #232323;">The report released Dec. 8 put the pernicious scope of the program in full perspective. Its key findings reveal the FDIC “equated legitimate and regulated activities&#8230;with inherently pernicious or patently illegal activities,” via “circular argument policymaking”&#8211;an original list of high-risk merchants were determined by FDIC, who then justified formal guidelines for banks by claiming the categories “had been previously noted”—by the FDIC itself.</p>
<p style="color: #232323;">The most egregious revelations centered around FDIC policymakers whose “personal animus” towards the payday industry was so intense that their senior-most bank examiners &#8220;effectively ordered banks to terminate all relationships with the industry.” An email from Thomas Dujenski, FDIC’s Atlanta regional director, to Mark Pearce, director of the Division of Depositor and Consumer Protection underscores that personal animus:</p>
<blockquote>
<p style="color: #232323;">I have never said this to you (but I am sincerely passionate about this) … but I literally cannot stand the pay day lending industry … I had extensive involvement with this group of lenders and was instrumental in drafting guidance on stopping abuses.</p>
</blockquote>
<p style="color: #232323;">Another damning email reveals that John Miller, <a href="https://www.fdic.gov/about/comein/bio-panelist/bio-fdic-miller.html"><span style="color: #1255cc;">Deputy Director</span></a> for Policy and Research in the Division of Depositor and Consumer Protection at the FDIC, was concerned about “taking pornography” out the equation in letters about targeted businesses to Congress. The redacted writer of the email expressed his concern that lumping pornography in with online gambling and payday loan companies might make it appear that the FDIC was making “moral judgments regarding the types of businesses with which our institutions deal.” The email continues:</p>
<blockquote>
<p style="color: #232323;">Jonathan heard where we were coming from but nonetheless wants to retain a reference to pornography in our letters/talking points. He thinks it’s important for Congress to get a good picture regarding the unsavory nature of the businesses at issue. He repeated that ‘one is judged by the friends one keeps,’ and he seems to feel strongly that including payday lenders in the same circle as pornographers and on-line gambling businesses will ultimately help with messaging on this issue.</p>
<p style="color: #232323;">If you feel there is legal argument beyond the one I made, and would like us to push back on this issue, please let me know.</p>
</blockquote>
<p style="color: #232323;">The report’s conclusions are unambiguous. &#8220;The practical impact of Operation Choke Point is incontrovertible: legal and legitimate businesses are being choked off from the financial system,” it states, further noting the experiences endured by firearms and ammunition dealers &#8220;is a testament to the destructive and unacceptable impact of Operation Choke Point.” The report’s last paragraph is a testament to the corrupt nature of the Obama administration and its power-abusing impulses:</p>
<blockquote>
<p style="color: #232323;">&#8220;At a minimum, Operation Choke Point is little more than government-mandated de-risking. FDIC, in cooperation with the Justice Department, made sure banks understood–or in their own language, &#8216;got the message&#8217;–that maintaining relationships with certain disfavored business lines would incur enormous regulatory risk. The effect of this policy has been to deny countless legal and legitimate merchants access to the financial system and deprive them of their very ability to exist. Accordingly, Operation Choke Point violates the most fundamental principles of the rule of law and accountable, transparent government.”</p>
</blockquote>
<p style="color: #232323;">Last June, Senator Rand Paul (R-KY) <a href="http://www.examiner.com/article/senator-rand-paul-tries-to-right-a-wrong-by-the-obama-administration"><span style="color: #1255cc;">filed</span></a> an amendment to the Science Justice Commerce Appropriations bill attempting to cut off the administration&#8217;s efforts to effectively shut down gun stores via Operation Choke Point. It followed the May 2014 passage of a House amendment sponsored by Rep. Blane Luetkeymeyer (R-MO) to <a href="http://www.conservativeactionalerts.com/2014/05/house-defunds-doj-choke-point-bullying-operation/"><span style="color: #1255cc;">defund</span></a> the program. It was ultimately <a href="http://newsbusters.org/blogs/tom-blumer/2014/06/03/establishment-press-ignores-house-vote-defund-operation-choke-point"><span style="color: #1255cc;">approved</span></a> by 204 Republicans and 117 Democrats. An article published by Human Events on Nov. 17, 2014 <a href="http://humanevents.com/2014/11/17/if-it-walks-like-a-lame-duck/"><span style="color: #1255cc;">indicates</span></a> the program has yet to be addressed in the still Democratically-controlled Senate.</p>
<p style="color: #232323;">After trying several senators’ offices, FrontPage contacted a source in Washington, D.C. who requested anonymity. He made a valiant effort to find any mention of the Operation Choke Point in the recently passed $1.1 trillion CRomnibus bill funding the federal government for FY2015. The search proved unsuccessful, indicating that it is more than likely Operation Choke Point remains alive and well. It behooves a GOP-controlled Congress to kill this egregious abuse of power as one of its first orders of business next year. The American public has no use whatsoever for public officials willing to trample the law to satisfy their personal worldview. In short, it’s time to strangle Operation Choke Point.</p>
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		<title>House of Debt &#8211; by Vasko Kohlmayer</title>
		<link>http://www.frontpagemag.com/2009/vasko-kohlmayer/house-of-debt-by-vasko-kohlmayer/?utm_source=rss&#038;utm_medium=rss&#038;utm_campaign=house-of-debt-by-vasko-kohlmayer</link>
		<comments>http://www.frontpagemag.com/2009/vasko-kohlmayer/house-of-debt-by-vasko-kohlmayer/#comments</comments>
		<pubDate>Wed, 09 Dec 2009 05:05:09 +0000</pubDate>
		<dc:creator><![CDATA[Vasko Kohlmayer]]></dc:creator>
				<category><![CDATA[FrontPage]]></category>
		<category><![CDATA[anxieties]]></category>
		<category><![CDATA[bank]]></category>
		<category><![CDATA[Barack Obama]]></category>
		<category><![CDATA[Ben Bernanke]]></category>
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		<category><![CDATA[brink]]></category>
		<category><![CDATA[business]]></category>
		<category><![CDATA[cash]]></category>
		<category><![CDATA[chain reaction]]></category>
		<category><![CDATA[Chairman Sheila Blair]]></category>
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		<category><![CDATA[default]]></category>
		<category><![CDATA[Dubai]]></category>
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		<description><![CDATA[What will keep the whole system up? What will bring it down?]]></description>
				<content:encoded><![CDATA[<p><img class="alignnone size-full wp-image-41013" title="housedebt" src="http://cdn.frontpagemag.com/wp-content/uploads/2009/12/housedebt.jpg" alt="housedebt" width="450" height="443" /></p>
<p>The announcement by the Dubai State Corporation that it was unable to pay interest on its debt sent shock-waves through global markets. Stocks and weak currencies dropped as traders and investors feared that this could usher a new episode in the world&#8217;s economic travailing.</p>
<p>One reaction in particular offered a revealing insight into just how uncertain things really are. <a href="http://business.timesonline.co.uk/tol/business/markets/the_gulf/article6934261.ece">Reported</a> the UK Times:</p>
<blockquote><p>Nervous traders transferred the focus of their anxieties from the risk of companies failing to the risk of nation states defaulting. Investors owed money by Mexico, Russia and Greece saw the price of insuring themselves against default rocket.</p></blockquote>
<p>This should tell us much about the fragility of the world&#8217;s financial system. The debt of the  Dubai&#8217;s state-owned corporation is approximately $80 billion. Even though it is a substantial figure, it is not very large in the grand scheme of things. To give a sense of proportion, Dubai&#8217;s debt comes roughly to one tenth of President Obama&#8217;s stimulus package.</p>
<p>And yet the possibility of default by Dubai World immediately sent investors scrambling to insure themselves against default by whole countries. Their fears even extended to nations such as Russia, a country which in a comparatively good position thanks to its large energy revenues.</p>
<p>This shows how little confidence the international financial community has in the system. The world&#8217;s money people fear that even a relatively small event can set off a chain reaction that would bring down nation states. Being part of the action, they are in the position to know what so many on the main street have suspected all along – things are not well. In the words of  noted financial commentator Bill Bonner, they fear that “the ripples stirred up in Dubai” could quickly “turn to Tsunami waves elsewhere.”</p>
<p>Despite what Barack Obama, Ben Bernanke and Timothy Geithner tell us, the problems that brought the global financial system to the brink in 2008 have not been fixed. They have only been papered over with massive amounts of freshly printed cash and cheap money in the form of near-zero interest rates. But too much money and easy credit were at the root of the problem in the first place. The measures that have been taken have only provided a temporary relief. Sooner or later the underlying problems will resurface again. The finance elites sense this, which is why even a relatively small failure makes them so nervous. They know that the seeming return to normalcy is only surface deep.</p>
<p>One can only wonder what governments will do when the crisis returns, since they have already fired the most potent weapons in their arsenal. It is not possible to lower interest rates below zero and given the current levels of government indebtedness, it will also be difficult to come up with more money for a new round of cash injections. A number of governments are on the brink of bankruptcy as it is. Another bout of massive borrowing is simply not a realistic possibility.</p>
<p>The next flare up could well bring on systemic failure. As it is, things do not look good. This year alone nearly 130 US banks have gone out business. This is four times more than the total for 2008. Recently it has been revealed by the Federal Deposit Insurance Corporation (FDIC) that more than 550 financial institutions are on the government&#8217;s problem list. What this means is that roughly 7 percent of US banks face the possibility of failure in the short term. Their names have not been released in order to avoid bank runs. Should these troubled banks start falling in large numbers, the effect would quickly snowball and many other banks who still appear relatively sound would be pulled down as well.</p>
<p>Fearing this, banks are reluctant to lend and prefer to sit on their cash to play it safe. The government is unhappy with this situation, because it wants as many loans as possible in order to stimulate economic activity. The Wall Street Journal <a href="http://online.wsj.com/article/SB125907631604662501.html?mod=WSJ_hpp_MIDDLTopStories">reports</a> that “government officials have stepped up pressure on banks to make more loans in recent weeks.” FDIC Chairman Sheila Blair echoed this point when she said: &#8220;We need to see banks making more loans to their business customers.&#8221;</p>
<p>Banks are, of course, correct in being careful. There is still too much debt in the system. What our economy needs at this point is further de-leveraging. Those businesses and enterprises that cannot make their payments need to go bankrupt so that the economy can be purged of the dross and then rise again on a healthier foundation. This, however, is precisely what the government is trying to prevent from taking place. It keeps propping up failed companies that should have been long out of business. Ensuring that they have access to cheap credit is part of that strategy. This approach averts some pain in the short term, but it ultimately only makes a sick system even sicker.</p>
<p>While the government is pressuring banks to make more loans, the FDIC – the very agency that insures depositors when a bank goes bankrupt due to bad loans – is itself in the red. What the FDIC&#8217;s predicament shows is that banks should be issuing fewer loans than they are currently making. But this is not the lesson government officials draw from the situation. Instead, they counsel the banks to do the opposite. They apparently do not worry where the FDIC will get its money from should more banks fail. After all, the printing presses of the Federal Reserve can easily resupply the depleted fund. All this money creation, however, exerts immense inflationary pressures on the dollar. This in turn is destabilizing to the world&#8217;s monetary regime which rests on the dollar as its foundation.</p>
<p>Rather than encouraging restraint, governments world over are making things worse by their irresponsible spendthrift policies. Those in the financial community know it, which is why they are so jittery these days. They know that even a Dubai size default could set off a chain of events that could eventually bring the whole system down like a house of debt that it is.</p>
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