An initiative by the United States Department of Justice that targets banks that work with businesses at a “high risk” for fraud has included firearms and ammunition sellers in its list of “dangerous” merchant categories, leading some shooting sports retailers to claim they’re being politically discriminated against.
The effort, known as “Operation Choke Point,” was ostensibly begun in 2013 to investigate banks associated with businesses involved in get-rich-quick ploys, Ponzi schemes, and other “questionable” pursuits. However, in the past several months firearms retailers and companies have reported encountering strange financial difficulties with their banks and in some cases, the complete severance of stable, decades-long business relationships—leading some to point to the operation as the cause of their problems.
Writing for Grand View Outdoors, OutdoorHub contributor Tom McHale said the following on the scandal:
While the underlying objectives of the initiative sound innocent enough, many worry the increased oversight could be used to squeeze legitimate businesses the federal government doesn’t like into default.
Simply by signaling intent to increase the level of scrutiny of certain bank customers, defined as “high risk” business types, federal authorities can exert enormous pressure on banks, experts say. What institution would want more frequent audit activity simply by choosing to maintain business relationships with customers deemed undesirable by auditors?
Allegations of discrimination by the Obama Administration’s Justice Department are serious enough that the National Shooting Sports Foundation issued the following statement yesterday:
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.
OutdoorHub.com will continue to follow the investigation into Operation Choke Point as it progresses. Special thanks to Hilary Dyer from Grand View Outdoors for sharing Tom McHale’s article with us.