In a free-market capitalistic system, the economy grows as companies compete freely for consumer dollars by producing superior products and services, adding jobs while their bottom-line grows. In such a system, the government plays a role as referee by protecting consumers and ensuring all corporate players compete legally and fairly. But in a crony-capitalistic system, the government does more than referee — it intervenes, attempting to assure success of some sectors and companies while thwarting and even penalizing those that are out of favor with the prevailing ideology. Over the past six years, our economic system has become increasingly controlled through governmental cronyism; and it just got much worse–and it’s based purely on ideology.
Early last year, the Department of Justice (DOJ) initiated a new probe into questionable mercantile ventures facilitated by commercial banks. Initially, “Operation Choke Point” targeted banks that service payday lenders (especially online ones) and other services that they thought to be dubious. DOJ pressured banks doing business with such firms to “choke” or restrict access of such firms to banking services, even to the point of closing the accounts of such firms.
This policy is not traceable to the passage of the Dodd-Frank Wall Street Reform and Consumer Protection Act, commonly referred to as FinReg. That Act created consumer protection regulations as well as other measures such as “too big to fail,” which were designed to prevent a collapse of the financial services industry as we saw in 2008. Those regulations are enforced through the Department of the Treasury.
Operation Choke Point, however, is being run through the DOJ as an extension of the president’s Financial Fraud Enforcement Task Force (FFETF). The Task Force was created in November 2009 for the express purpose of holding accountable the individuals and institutions that created the last financial crisis. This task force, headed by the DOJ, includes the FBI, the Securities and Exchange Commission, the Secret Service, the U.S. Postal Inspection Service, Federal Deposit Insurance Corp., and the Consumer Financial Protection Bureau. The evidence for potential abuses is generated by banks through their reporting of Suspicious Activity Reports (SARs), making banking institutions partners with law enforcement agencies in identifying and flagging questionable financial activity.
This puts banks in a tenuous position with law-enforcement and government agencies. As the Wall Street Journal reported last month, “Banks, which need a reliable and safe payments network to survive, have always worked with law enforcement to fight fraud and even terrorism in the financial system. Banks provide tips to law enforcement when a customer’s behavior seems fishy, and they assist in investigations when asked. In the past year alone, banks have filed nearly a million suspicious activity reports with regulators, including suspicions of mortgage fraud, identity theft, counterfeit debit and credit cards, tax evasion and wire-transfer fraud.”
Clearly, the intent of the FFETF is appropriate, as it relates to curtailing illegal or dubious financial ventures and transactions and restricting money-laundering schemes. The problem is, it’s now gone much further than the original intent.
The views expressed in this opinion article are solely those of their author and are not necessarily either shared or endorsed by WesternJournalism.com.
This post originally appeared on Western Journalism – Informing And Equipping Americans Who Love Freedom