In a letter dated August 16, 2017 to House Judiciary Committee Chairman Bob Goodlatte, Assistant U.S. Attorney General Stephen Boyd stated that “[a]ll of the [DOJ’s] bank investigations conducted as part of Operation Chokepoint are now over, the initiative is no longer in effect, and it will not be undertaken again.”  Acting Comptroller of the Currency Keith Noreika, in a letter sent yesterday to House Financial Services Committee Chairman Jeb Hensarling, indicated that the OCC “welcome[d] the recent clarification by the [DOJ] of its position ending Operation Chokepoint” and would “continue to articulate [the OCC’s] position rejecting the tactics and goals of Operation Chokepoint….”

“Operation Chokepoint” was a federal enforcement initiative involving various agencies, including the DOJ, the FDIC, and the Fed.  Initiated in 2012, Operation Chokepoint targeted banks serving online payday lenders and other companies that have raised regulatory or “reputational” concerns.  In his letter, which responded to a letter sent by Representative Goodlatte to Attorney General Jeff Sessions, Assistant AG Boyd called Operation Chokepoint “a misguided initiative conducted during the previous administration.”  He stated that the DOJ “share[s] your view that that law abiding businesses should not be targeted simply for operating in an industry that a particular administration might disfavor.  Enforcement should always be based on the facts and the applicable law.”

Assistant AG Boyd indicated that to the extent the DOJ continues to pursue ancillary investigations involving criminal activity discovered as a result of subpoenas issued as part of Operation Chokepoint, none of such investigations “relates to or seeks to deter lawful conduct.”  He also stated that the DOJ “will not discourage the provision of financial services to lawful industries, including businesses engaged in short-term lending and firearms-related activities.”

Acting Comptroller Noreika’s letter was sent in response to a letter sent by Representative Hensarling asking the OCC to issue a formal policy statement repudiating Operation Chokepoint.  In his response, Mr. Noreika stated that “[t]he OCC is not now, nor has it ever been part of Operation Chokepoint.”  He indicated that the OCC “rejects the targeting of any business operating within state and federal law as well as any intimidation of regulated financial institutions into banking or denying banking services to particular businesses.”  Mr. Noreika observed that the OCC “expects the banks it supervises to maintain banking relationships with any lawful businesses or customers they choose, so long as they effectively manage any risks related to the resulting transactions and comply with applicable laws and regulations.”

Operation Chokepoint is currently the target of a lawsuit pending in D.C. federal district court in which several payday lenders allege that certain actions taken by regulators as part of Operation Chokepoint violated their due process rights.  (The action was filed against the OCC as well as the Fed and FDIC.)  In a decision issued last month, the district court denied the agencies’ motion to dismiss, holding that the plaintiffs had established both standing and a plausible claim for relief, and concluded that the agencies were not entitled to judgment on any of the plaintiffs’ due process claims.