FDIC Ordered to Turn Over Documents in Operation Choke Point Lawsuit

'With discovery granted, it’s probably smart for some former DOJ and FDIC officials to lawyer up'

FDIC Headquarters in Washington, DC / Getty Images

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The Federal Deposit Insurance Corporation (FDIC) was ordered to turn over documents related to Operation Choke Point late last week.

District Court Judge Gladys Kessler told the government agency it had to begin working with the plaintiffs in the case for a nine-month discovery period beginning on June 20, 2017. "There is no justification whatsoever for not granting Plaintiffs' Motion to Commence Discovery Immediately," Judge Kessler said in her order.

The order comes after the Community Financial Services Association of America (CFSA) and a group of financial services companies filed suit against the FDIC over their conduct during Operation Choke Point. Under that operation banks were allegedly pressured into cutting ties with industries the Obama-era agency viewed unfavorably. Payday and other short-term lenders as well as those involved in the firearms industry said they were specifically targeted under the program.

The firearms industry has been particularly vocal in its opposition to Operation Choke Point. The National Rifle Association and other gun-rights groups have called the operation an attack on the industry.

"‘Operation Choke Point' is an Obama Administration initiative that encourages federal financial services regulators to harass and intimidate banks and financial institutions that work with firearm and ammunition retailers," the National Rifle Association said in February 2016. "By leaning on the banks, regulators hoped to bring an end to those relationships thereby choking off their cash flow and forcing them out of business. A 2015 Congressional Investigation revealed that ammunition and firearm sales and dealers had, in fact, been targeted."

CFSA said they were happy with the court's order and believe the documents they will receive during discovery will shed light on whether the FDIC forced banks to deny certain businesses their services and, if so, how they chose which industries to target.

"We are thrilled by the Court's order to enter the discovery phase, as this illegal federal program has been unduly harming legal entities for years," Dennis Shaul, CEO of CFSA, told the Washington Free Beacon. "This court order allowing discovery will now finally enable the plaintiffs to access records of the federal government's behind-the-scenes and secretive campaign to force banks to terminate their relationships with lawful American businesses. It is high time that the government's unlawful and unjust crusade against lawful and licensed businesses be stopped. The federal regulators leading Operation Choke Point have threatened and pressured banks in the shadows of the law for far too long.

"The government defendants are well aware they have been on the wrong side of history for years and will stop at nothing to hide the extent of their illegal campaign. The Court's ruling will allow these shady and criminal actions to be brought to the light of day."

Brian J. Wise, president of the U.S. Consumer Coalition and a consumer rights activist who has spoken out in opposition to Operation Choke Point for years, said the discovery order is a major victory for the plaintiffs because it will now bring the details of how the program operated into public light.

"The decision to grant discovery is probably the most important victory in the entire case, likely more important than the final judgment," Wise told the Free Beacon. "This covert program attempted to operate in the dark, depriving businesses of banking relationships, in an attempt to shut down lawfully operating industries. Through the discovery process, the American people and small business owners have the opportunity to find out the Truth about efforts to deprive them of their constitutional rights. It is understandable that the former Administration would fight this case so hard. With discovery granted, it’s probably smart for some former DOJ and FDIC officials to lawyer up."

The NRA and FDIC did not respond to requests for comment on the discovery order.

Stephen Gutowski   Email Stephen | Full Bio | RSS
Stephen Gutowski is a staff writer for the Washington Free Beacon. He founded his own site as a junior in college and has been writing about news and politics since that time. He spent 4 years with the Media Research Center and was most recently with the Capitol City Project. His email address is Gutowski@FreeBeacon.com. His twitter handle is @StephenGutowski.

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