“Choking Off” Disfavored Businesses and Their Clients: How Operation Choke Point Undermines the Rule of Law and Harms the Economy

Operation Choke Point, Rule of Law and Impact on Disfavored Businesses

Abstract

The Justice Department’s Operation Choke Point threatens to harm legitimate businesses while reducing the welfare of their customers. Imposition of such new burdens by long-established agencies also appears to be inefficient if not inappropriate, since a new specialized agency, the Consumer Financial Protection Bureau, has been established precisely to deal with the problem of financial fraud. OCP should be reoriented to focus instead on objective empirical evidence of the likelihood of fraudulent conduct. It should eschew arbitrary classifications of “suspect” industries and avoid placing excessive burdens on financial intermediaries to act as government agents in the detection of fraud. Adoption by federal regulators of recommendations along these lines would protect consumers from financial fraud without hobbling legitimate business interests and depriving consumers of full access to the legal products and services they desire.

 

read more.....  http://www.heritage.org/research/reports/2014/08/choking-off-disfavored-businesses-and-their-clients-how-operation-choke-point-undermines-the-rule-of-law-and-harms-the-economy