Operation Choke Point: The Government's Covert War on Small Business

A program meant to stamp out fraud has put a stranglehold on legitimate industries.

|

Banks are sending notices of account closure out to small businesses across the country, to clients they've done business with for years, even decades. The reason? They often don't provide one.

But a growing number of business owners believe they know why they're being cut off from the financial system. It's Operation Choke Point, ostensibly an attempt to crack down on fraudulent businesses, but in reality a dragnet that has ensnared innocent entrepreneurs unfairly classified as "high-risk" players.

Earlier this year, FDIC chairman Martin Gruenberg told Congress that Choke Point was over, but many business owners believe the FDIC and DOJ has passed enforcement duties along to a newly created independent agency: the Consumer Financial Protection Bureau (CFPB), the brainchild of progressive senator Elizabeth Warren (D-Mass.). The CFPB operates under the guidance of the Federal Reserve and doesn't rely on Congress for funding, which critics say allow it to operate without any meaningful checks on its power. 

Reason TV profiled two business owners who believe they've been targets of Choke Point and its legacy: a payday lender in Southern California and a hookah seller in North Carolina. Brian Wise of the U.S. Consumer Coalition, an organization that's been compiling Choke Point stories from across the nation, also appears in the video.

Watch the video above for a deeper look into the covert financial regulation affecting small businesses across the nation.

Approximately 10 minutes. Produced by Zach Weissmueller. Camera by Alex Manning, Josh Swain, Todd Krainin, and Weissmueller. Music by Podington Bear and Chris Zabriskie.

Scroll down for downloadable versions of this video. Subscribe to Reason TV's YouTube channel for daily content like this.

NEXT: Can Americans Still Take a Joke? Comedians Say 'No.'

Editor's Note: We invite comments and request that they be civil and on-topic. We do not moderate or assume any responsibility for comments, which are owned by the readers who post them. Comments do not represent the views of Reason.com or Reason Foundation. We reserve the right to delete any comment for any reason at any time. Report abuses.

  1. Gee, a Warren presidency sure sounds like fun.

    1. It’s going to be Biden-Warren. Biden will promise to be single-term, and to pass the baton to Warren. Progressives and feminists will love it and ordinary Democrats can tolerate it.

      1. Andrew Wilkow insists it’s going o be Biden and Julian Castro. Not sure either way myself.

    2. Elizabeth Warren! Friend of the little guy, the regular people! Unless you drink, smoke, gamble, collect coins, use hookahs, watch porn, use payday lending, use a dating service, get a tattoo, blow off fireworks, own a gun, have fun, have a life….

  2. Wikileaks was an excellent example of how the US abuses its authority of banks and payment processors to destroy organizations it doesnt like. This is why decentralization of trade (bitcoin, black markets, et al) Is such a vital defense against totalitarianism.

    1. Sounds like a lot of other “regulators”! They are in control and do not like anything “different” sometimes referred to as innovation! They love destroying the competition. Especially, if the innovation is making the competition more money than they do!

      1. My nephew operates a small chain of hydroponic stores in Washington State. Last fall he was notified by Chase M what tan that they were closing all his accounts, lines of credit, etc.. He then contacted several other large banks to open accounts. None would take him. He runs millions of dollars of deposits every year, and is a good bank customer.

        Finally, on my advice, he approached a few of the local state chartered.credit unions. He quickly found one that was able to provide the services he needed.

        This is all just one more reason that supporting democrats is supporting treason

  3. The CFPB operates under the guidance of the Federal Reserve and doesn’t rely on Congress for funding, which critics say allow it to operate without any meaningful checks on its power.

    Holy shit. Has this ever been challenged in court?

    1. to big to control, na repubs and dems like giving control to others so they can claim it snot their fault but elect me so I will do nothing about it

    2. Holy shit, do you not pay the slightest bit of attention to what the government’s planning on doing until after it’s been done? The whole notion of the CFPB was noted and challenged and bitched about a long time ago, but no angry mobs with torches and pitchforks showed up on Capitol Hill so they went ahead and passsed it because FYTW. Unless and until angry mobs with torches and pitchforks show up on Capitol Hill, the FYTW is going to keep getting worse.

  4. This has been happening to businesses of all sorts for quite some time. Gun shops, strip clubs, payday lenders, and even porn studios have been subject to federal harassment, through complicit financial institutions, with essentially no recourse whatsoever. It has to stop.

    It amounts to repression by proxy.

    1. Odd that democrats would target porn studios. They like their Porn too.

  5. The macabre irony here is that ISIS, the premiere torture, murder and rape spree spectacle of planet earth, remains untouched by a ravenous and super-duper busy army of autocrats distracted by hard-working people who sell shit the establishment simply doesn’t like.

    None of the lines that connect reality make a shred of sense anymore. I swear I wake up some goddamn days and I want to crawl back into the fucking womb.

    1. ISIS isn’t a threat to the bureaucrats. They are also hard to get at, and tend to murder people at a whim.

      The small mom and pop shops OTOH, are easy to get at, and tend to not murder people.

      1. Yes tarran, and there is no money to be had from ISIS.

        1. Attacking ISIS would be racist, don’t you know. It wouldn’t be virtuous, like attacking gun shops and strip clubs.

    2. It ain’t no wonder that the babies come out crying in advance.

      1. I came out smoking a cigarette.

        1. When our son came out he saw his shadow; next thing you know, there was 8 years of Obama.

          1. Could you please not have any more kids then?

    3. …Wait a second. That was lucid and coherent!

      Who are you and what have you done with the real Agile Cyborg?!

  6. “Earlier this year, FDIC chairman Martin Gruenberg told Congress that Choke Point was over, but many business owners believe the FDIC and DOJ has passed enforcement duties along to a newly created independent agency: the Consumer Financial Protection Bureau (CFPB), the brainchild of progressive senator Elizabeth Warren (D-Mass.). The CFPB operates under the guidance of the Federal Reserve and doesn’t rely on Congress for funding, which critics say allow it to operate without any meaningful checks on its power.”

    If I were one of the Congresscritters that had been told Choke Point was over, and I read this, I think I would have Mr. Gruenberg in again and ask him “You told us Choke Point is over, and that appears to not be the case. What do we have to to to MAKE it over? Defund and disband your entire agency?”

    1. Defunding was a slight of hand. Now they can say it’s out of their hands and then use an unaccountable entity to go after their undesireds when their guy is elected president.

      1. exactly its all about deflecting blame.

    2. Except that the government doesn’t fund or control the Fed. It is a private entity owned and controlled by the banks. This is the ultimate in cronyism.
      How is this even legal? FYTW?

      1. How is this even legal? FYTW?

        Isn’t that pretty much how the government operates now? “Constitution? We don’t need no stinking constitution!”

        I suppose maybe auditing the Fed might at least shed some light on what the CFPB is up to, since it’s funded by the Fed. At least it’ll tell us how much money they’re spending on it.

    3. Defund the FDIC? DOJ? Congress can’t manage to de-fund useless and unpopular shit. The FDIC knows that’s a bluff.

      Defund the CFPB? Can’t be done. It’s funded by the Fed, not Congress.

    4. I suggest implementation of Rule7.62!

    5. Maybe an off the books wetworks team to eliminate this kind of bureaucratic garbage?

      1. Fucking Busab, what do we pay them for?

  7. the dems don’t like small business since they rarely unionize. remember Hillary’s comments about Uber and people working in other private business, they don’t like independent people because they directly know how government regulation hurts them and their customers.

    1. They also don’t like prosperity, no matter what the source. Prosperous people get obstreperous; they don’t just do what they are told by their Betters.

      1. ^THIS. Sadly.

      2. Of course they hate prosperity. The democrats are the party of the poor. To retain their power they must keep everyone poor.

  8. It’s comforting and inspiring that Lizzy is out there fighting the good fight against big corporations.

  9. The program was never “meant to stamp out fraud.” It was meant for exactly what it’s being used for, an extra-legal bludgeon for the government to use against businesses it doesn’t like.

    1. And how does one ensure that government likes you ?

      Campaign donations. That’s all it takes. I remember when Microsoft first began to have anti trust problems and it was disclosed that Gates donated only tiny amounts of money into the political process. One Micrsoft began to hear rumblings of anti trust problems he opened the floodgates on political donations and his problems quietly went away.

      1. Exactly why Trump found it necessary to donate to Democrats and invite them to his wedding(s)!

      2. Well, they moderated. He was still stung by that anti-trust filing by DoJ.

      3. Clearly he needed a ‘Man in Washington’.

  10. I wish one of these shadowy libertaian billionaires who secretly run the country would start an actual independent bank, tell the FDIC to fuck off, and market their services to marijuana dispensaries, brothels, gun stores and all the other Choke Point victims. He’ll, if Trump did that, I’d vote for him.

    1. I might even open an account.

    2. If Trump joined the LP and did that I’d be real tempted.

  11. You know who else used quasi government agencies to attack businesses he didn’t like?

    1. Every tyrant everywhere?

  12. Payday lenders are money services businesses. I do not think it losing banking had anything to do with this operation.

    Banks, since the passage of the Patriot Act, have been increasingly unwilling to bank MSBs because of the perceived money laundering risk (also because MSBs may be subject to onerous state licensing requirements which many don’t obtain). Of course, the same regulators who make bank managers’ lives miserable by fining them for supposedly “improperly” overseeing MSBs also bemoan the loss of banking services for MSBs…

  13. The CFPB operates under the guidance of the Federal Reserve and doesn’t rely on Congress for funding, which critics say allow it to operate without any meaningful checks on its power.

    And like all bureaucracies it will grow and spread until it won’t be possible to legally operate any business unless the CFPB approves. And there won’t be a God-damned thing anyone can do about it. Stick a fork in it, the “American experiment” is over.

    I don’t want to live on this planet anymore. *applies for seat on one way Mars colony*

    1. Mars is no good, Cohaagen will just cut off your air.

  14. Just another example of what I will politely describe as a case of Ongoing Federal Bullshit? By the way, I would give short shrift to these Pay Day Lenders, who strike me as nothing other than extortionists, who prey on the weak.

    1. Yeah, everyone has that attitude when the people who lent them money want it back.

  15. Covert? Then this is the most overt covert action of which I’ve ever heard.

  16. FDIC chairman Martin Gruenberg told Congress that Choke Point was over,

    Just like the NYPD stopped illegally searching any black guy they ran into on the street, right?

    -jcr

  17. This entire scam by the government in bed with the banks is going to come to an end. It will be a collapse. Aside from the country going bankrupt from debt, the system will collapse under the weight of its own corruption and hubris.

    International forces are organizing to end the western banking cartel. Things will get pretty ugly.

  18. Gun stores have been major targets of these tyrannical maggots.

  19. Start working at home with Google! It’s by-far the best job I’ve had. Last Wednesday I got a brand new BMW since getting a check for $6474 this – 4 weeks past. I began this 8-months ago and immediately was bringing home at least $77 per hour. I work through this link, go? to tech tab for work detail,,,,,,,

    http://www.homejobs90.com

  20. I used to make 700 dollars a day working at home for google, but operation chokepoint shut down my business and now I make 1,000 dollars a day committing petty murders in Manila.

    1. “petty” murders? 🙁

      That’s the antithesis of libertarianism.

  21. Ironically, Bank of America Chairman Giannini was identified in September 1929 as on the board that year of City Trust, a bank financing the heroin trade during alcohol prohibition. B of A was later implicated in the Atlantic Highlands Syndicate up the coast from Atlantic City. The bank’s biography omits mention of these things, like a victim sanctioning its oppressors. The size of the operation hit the papers October 18, 1929 and the series of flash liquidations called The Crash began almost immediately. Sure enough, the banking panics soon followed. The same thing happened in 2007 when the Bush Administration’s use of tax laws to confiscate bank accounts and “share” asset forfeitures with state governments again sounded the leper’s bell and money fled the banks and securities markets.

    1. Best to just round up progressives en masse and ship them far away from America.

      1. I hear that LIberia is nice this time of year. It was born of freedom. And, it has a long progressive history.I’m sure they’d be right at home.

        1. I was thinking more like Antarctica. But not the good part.

  22. They’d only be backfilled by loan sharks. Then you would see what extortion really looks like.

  23. Google pay 97$ per hour my last pay check was $8500 working 1o hours a week online. My younger brother friend has been averaging 12k for months now and he works about 22 hours a week. I cant believe how easy it was once I tried it out.
    This is wha- I do…… ?????? http://www.online-jobs9.com

  24. Example #46893 of regulators and politicians protecting their cronies under the guise of protecting consumers.

  25. Please tell us the number of the reform bill so that we can mass-email Congresscritters about it!!!

  26. OT: Transgender advocacy group thinks their feelings are more important than dying children.

    “A charity fun run that invited men to dress up as women is being investigated by police after a transgender charity claimed the dress code constituted a hate crime.
    Officers were asked to look into the ‘Dames on the Run’ race – where men run dressed as women to raise funds for a children’s hospice – by a transsexual support group.”

    “”Transvestites certainly don’t dress for comic purposes and I don’t get up in the morning and think ‘what can I put on today to give people a laugh?’
    “This race pokes fun at cross-dressing and, by association, us, reducing us to objects to be laughed at.
    “Dehumanising us this way gives carte blanche to those that would do us physical harm, much like the gay bashers of old.
    “It’s a small step from ridicule to persecution. The current stats suggest a 34 per cent chance of beaten up, raped or killed for being trans. We do not need to give the bigots any more ammunition.”

    If you have a cross-dressing fun run, transgendered people will be viciously beaten and raped. #logic

    1. Fucking assholes. But I’m really glad British police are looking into the charity. It’s not like there are pedophile rape gangs all over that gangrenous wound of a country or anything. Fuck, this is how you get guillotine lineups.

      We do not need to give the bigots any more ammunition.

      What do you think your action is DOING, moron?! Fuck!

    2. Oh, lordy….

    3. “Transvestites certainly don’t dress for comic purposes and I don’t get up in the morning and think ‘what can I put on today to give people a laugh?’

      – 1 Kitty Powers

      1. – every gay bar I have ever been to

    4. Fuck every overly sensitive, PC, pussy, snowflake in the world, directly in the ass with a red-hot poker!

      God fucking damn I’m sick of this bullshit.

      NO! I DON’T CARE ABOUT YOUR FUCKING FEELINGS! Get over it!

      1. Why do you want transgendered people to be raped?

        1. Shits and giggles?

      2. I care about your feelings.

        1. It may seem a little strange, but I think we should all get together for a group hug sometime.

          1. In the camps or Warty’s basement?

            1. Is there really a difference?

    5. I wonder how much of the “transexual support group” is actual transsexuals. And how much of the transsexuals are part of support groups.
      I mean, I was raised in NYC in the 80s and 90s, and the very few transsexuals that I personally knew were pretty nice people, albeit very weird…but tougher than shit. I always saw transsexuals as pretty scary tough guys. Walking around drunk at 2 am and fucking with 3 or 4 trannies was a good way to get cut or some shit. Even making fun of them they would give it right back and even chase you. I guess I could see a group of assholes finding a tranny and beating the shit out them, that happens, and it’s horrible…but to equate that with a bunch of guys dressing up and stumbling around in heels for charity is ridiculous.

      1. I would make the natural assumption that transsexuals and homosexuals had to be tough (and a good number probably still are) to deal with a lot of the shit they had to deal with. Now, for some it is an easy way to garner attention from the victim class.

        1. Now, for some it is an easy way to garner attention from the victim class.

          It’s a way to earn medals in the Oppression Olympics.

      2. Older transgendered people tend to be pretty badass, whereas younger transgendered people have been infected by the leftist victim cult to a disturbing degree. Obviously there are exceptions, but you’ve got older drag queens like Ru Paul defending their right to make jokes about the word ‘tranny’ against whiny Millenial transsexuals and transvestites who have never had to deal with the actual oppression and violence Ru Paul would have been more likely to see in the ’80s.

      3. So now watching ‘Monty Python’s Flying Circus’ is a crime?

    6. But England has a long, almost sacred, tradition of men dressing in drag. It’s in Bridge on the River Kwai for God’s sake!

      What are these monsters going to go after next- boarding school buggery?

    7. “This race pokes fun at cross-dressing and, by association, us, reducing us to objects to be laughed at.”

      No shithead, it isn’t the race that is doing that. You seem to be doing a fine job all by yourself.

      “It’s a small step from ridicule to persecution.”

      Aha. So he admits it is only ridicule, not an actual cri…..Oh. It’s England. Hate speech isn’t free speech. I get it now.

      That is funny because the Brits have a long, rich history of using cross dressing in their comedy. I don’t get it, but they think it is hilarious.

      1. Monty Python reruns must be outlawed!

    8. “First they came for the minstrel shows”

  27. Seen today on the streets of downtown Nashua: A vehicle, which if I remember correctly has New Hampshire plates, with a bumper sticker stating, “NO TOLERATION OF INTOLERANCE”. The “Obama/Biden” and SJW-style anti-racist bumper stickers on that car lead me to believe the owner does not intend the first sticker mentioned as sarcasm.

    1. If you disagree with the tolerant left then you are intolerant.

      The irony of their calling their complete and total lack of tolerance for differing viewpoints “tolerance” is completely lost on them.

      1. I thought of you when I saw the sticker. I at first thought the sticker was meant as sarcasm. Then I noticed the other stickers on the car.

    2. When you see a bumper sticker like that, you need to run them off the road. Then stop and beat the SJW to teach them the lesson it isn’t ok to be an SJW.

    3. “Free State Moment!”

    4. I suggest you enhance the car with additional bumper stickers?

      Maybe something like:

      Intolerance will be beaten
      and gagged.

  28. I’ve read about this elsewhere, and it’s basically an attempt by a corrupt, despotic regime to shut down businesses they disapprove but can’t eliminate by legitimate means. This is why the “Justice” Department should be defunded — under Obama, it serves (and can serve) no useful purpose.

  29. So how does the Fed fund it exactly? Do they just pay the employees in freshly printed stacks of 100s?

    1. I might try Hopdoddy this week. Which burger is best? I have my eye on the poblano or primetime.

      1. Primetime amongst those 2. Do it with an egg. Super decadent.

        They also added one for cali called the k town belly that is really good

        1. Is it pork belly? If so, I’m in.

  30. NASCAR race at Bristol last night was epic.

    Indycar at Pocono….meh,,,,crashfest. Let’s see if they can manage to get it in before dark.

  31. It’s almost like if enough people really want something, they’re going to get it regardless of how much money the control freaks waste on trying to stop it.

  32. Oh no, the gov’t is at it again. Violating rights, not held accountable and shielded from any consequenses.

    Hmmm. What was the business owners most chaotic experience? Was it engaging in transactions with their customers free from force, theft and coercion (besides the regs and extortion from the gov’t)? Or was it being harassed and put out of business by the gov’t?

    The latter holds true. These folks had their lives ruined, and sent into real CHAOS.

    That’s why I laugh when folks call anarchy chaos. Watches, jewelry, shoes, clothing, boilers, the Internet, computers, online shopping, and many other areas where gov’t is not involved, doesn’t face crisis or chaos. When was the last clothing crisis? For how long did it last?

    Meanwhile, wherever gov’t gets involved, things wind up in crisis or chaos. Roads, education, healthcare, college, mortgages / housing, justice, energy, defense, security / policing, and even the off track betting, money and banking. Of course the politicians like to blame the “free market” for the problems they create. Yet any areas of the market that are free are not in crisis mode, and blow their claims away.

  33. This is a terrible situation to be in, but their are a few ideas small businesses can look at:

    Credit Union Account
    Bitcoin Account
    Litecoin Account
    Cash Only

    Best of luck.

    1. Cash Only is begging for an arrest and civil forfeiture.

      1. Only if they find the stashes.

  34. Start working at home with Google! It’s by-far the best job I’ve had. Last Wednesday I got a brand new BMW since getting a check for $6474 this – 4 weeks past. I began this 8-months ago and immediately was bringing home at least $77 per hour. I work through this link, go? to tech tab for work detail,,,,,,,

    http://www.homejobs90.com

  35. Google pay 97$ per hour my last pay check was $8500 working 1o hours a week online. My younger brother friend has been averaging 12k for months now and he works about 22 hours a week. I cant believe how easy it was once I tried it out.
    This is wha- I do…… ?????? http://www.online-jobs9.com

  36. Question from a non-lawyer: If the CFPB acts under the supervision of the Federal Reserve, which is a private organization, not protected by the concept of Sovereign Immunity, then what, if anything, shields Cordray and his minions from lawsuits for tortious interference with contract, or whatever legal protections we have against having our livelihoods wantonly interfered with? Are there any lawyers out there who can educate us?

Please to post comments

Comments are closed.