WASHINGTON–Four payday lenders have settled a lawsuit they filed against the FDIC alleging it improperly forced them to terminate relationships as part of the Obama Administration’s Operation Choke Point.
The controversial Operation Choke Point investigation ran from 2013 until officially ending in 2017 and involved a Department of Justice effort to examine banks and other businesses that did business with firearms dealers, with the Department saying its goal was to root out money laundering and fraud. The investigation led to the termination of many banks’ relationships with payday lenders and also charges against numerous banks themselves.
Critics, including former FDIC Chairman William Isaac, blasted Operation Choke Point, which was the subject of a number of congressional hearings.
In a statement, the FDIC said it has resolved a lawsuit with Advance America, Cash Advance Centers, Inc.; Check Into Cash, Inc., and Northstate Check Exchange (Advance America et al. v. Federal Deposit Insurance Corporation et al. (D.D.C.) that had been filed over alleged terminations of payday lender bank accounts.
FDIC Issues Statement
“In exchange for the plaintiffs’ agreement to dismiss the lawsuit,” the agency said in a statement, “the FDIC is issuing: (1) a statement summarizing its longstanding policies and guidance regarding the circumstances in which the FDIC recommends that a financial institution terminate a customer’s deposit account and reiterating preexisting public guidance to financial institutions about providing banking services and carrying out Bank Secrecy Act obligations; and (2) a cover letter transmitting the statement to the plaintiffs that reiterates prior correspondence from the FDIC Chairman, summarizes applicable FDIC policy, and notes that the FDIC is conducting additional training of its workforce.”
The FDIC added, “Neither the summarizing statement nor the cover letter represents a change in the FDIC’s policies or guidance, and all of the FDIC’s existing applicable regulations and guidance documents remain in full force and effect.”