Tag: operation choke point

22
May

Operation Choke Point: FDIC Surrenders to Payday & Small Dollar Loan Industry

Great news for “the business of lending to the masses!” Thanks to the heavyweights in our industry, Advance America and Check Into Cash, consumers continue to win. Consumer access to a multitude of choices when dealing with temporary financial setbacks prevails.

“We uncovered how some FDIC leaders and officials executed a campaign motivated by personal scorn for our industry, contempt for our millions of customers, and blatant disregard for due process. This settlement will help to prevent this disenfranchisement from happening again – to our business or any other legal, regulated business.” Chief Legal Officer Jessica Rustin, Advance America.

It took 5 years but “Operation Choke Point” has been dealt a SEVERE blow. 

Consumers, lenders, and vendors all owe a HUGE thank you to these companies and those of you who support the industry associations and participated on this long, arduous, expensive journey!

SPARTANBURG, S.C.PRNewswire/ — Advance America and Check Into Cash announced today that they have reached a settlement with the Federal Deposit Insurance Corporation (FDIC) regarding Operation Choke Point, the FDIC program that pressured banks to cut ties with certain categories of lawful businesses, including payday lenders.

“Five years after taking the extreme and costly step of suing federal regulators, we are pleased with the FDIC’s actions to address past efforts to cut off our companies’ access to the U.S. banking system,” said Jessica Rustin, Advance America’s Chief Legal Officer. “We uncovered how some FDIC leaders and officials executed a campaign motivated by personal scorn for our industry, contempt for our millions of customers, and blatant disregard for due process. This settlement will help to prevent this disenfranchisement from happening again – to our business or any other legal, regulated business.”

As a result of this settlement agreement, the FDIC will issue a statement to reiterate its policies. The FDIC previously acknowledged that certain employees acted in a manner inconsistent with FDIC policies and existing guidance with respect to payday lenders, creating misperceptions about its policies. These attempts have proven ineffective in resolving the issue.

The steps taken as part of this settlement are consistent with statements made by FDIC Chair Jelena McWilliams, who declared in a letter to members of Congress earlier this year that “[r]egulatory threats, undue pressure, coercion, and intimidation designed to restrict access to financial services for lawful businesses have no place at this agency.”

“While the FDIC took steps to reinforce its policies with staff and the industry, the effects of Operation Choke Point linger, with banks continuing to terminate accounts and refuse services to payday lenders,” said Greg Madson, Chief Legal Officer at Check Into Cash. “It is our hope that this settlement clarifies once and for all the FDIC’s policies so that banks feel free to provide services to lawful businesses operating in compliance with applicable federal and state laws, without fear of regulatory pressure or retribution.”

The FDIC will conduct training of its examination workforce on these policies by the end of 2019 to ensure that its examiners adhere to the highest standards of conduct and respect the rule of law. The training will specifically include matters related to Operation Choke Point.

Lastly, the FDIC has established a robust complaint process through which information regarding potential violations of these policies may be investigated. If banks or customers continue to be concerned that FDIC personnel are not following the FDIC’s policies regarding Operation Chokepoint, they may email the FDIC at transparency@FDIC.gov.

In June 2014, the Community Financial Services Association of America (CFSA), the national association for small-dollar lenders, joined industry partners and its largest member companies, Advance America and Check Into Cash, to file the lawsuit, Advance America et al. v. Federal Deposit Insurance Corp. et al., to end Operation Choke Point and the government’s persistent regulatory overreach. Discovery exposing depositions and damaging emails of government officials, most notably at the FDIC, was released in October 2018 as part of the Plaintiffs’ Motion for Summary Judgment in the lawsuit. The settlement is the result of court-ordered mediation prior to a judge’s ruling on summary judgment.

“Certain FDIC officials operated well outside of the rule of law and disregarded due process when they targeted lawful businesses under Operation Choke Point,” said Dennis Shaul, CEO of the Community Financial Services Association of America (CFSA). “Regulatory policy must never be predicated on personal preferences and this settlement should make clear that such abuses of power will not be tolerated.”

About Advance America Cash Advance 
Founded in 1997, Advance America, Cash Advance Centers, Inc. is the country’s leading provider of non-bank cash advance services, with approximately 1,900 centers across the country. The Company is a founding member of the Community Financial Services Association of America (CFSA), whose mission is to promote laws that provide substantive consumer protections and to encourage responsible industry practices. Please visit www.AdvanceAmerica.net for more information.

About Check Into Cash 
Founded in Cleveland, Tennessee in 1993 by entrepreneur and philanthropist Allan Jones, the Check Into Cash brand is a state licensed and regulated small balance lender. Check Into Cash stores offer check cashing, Western Union® money transfers, prepaid U.S. Money Cards, and other convenient services as a complete One Stop Money Shop®.

Check Into Cash is a founding member of the Community Financial Services Association of America (CFSA), the trade association representing the nation’s payday lenders. The CFSA advocates for best practices and helps enact legislation that balances the needs of the consumer with the interests of the industry.

04
Dec

Operation Choke Point: The Saga Continues & Dept. Heads at Dept. of Justice, FDIC & OCC SHOULD Roll!

This in from American Banker:

By: Dennis Shaul CFSA

“The small-dollar lending industry has long known that government bureaucrats with a partisan agenda were determined to bring the industry to its knees, but this illegal campaign went farther than anyone could have imagined — with those at the very highest levels of the Department of Justice, FDIC and Office of the Comptroller of the Currency targeting customers of regulated banks based on their personal bias.”

“Government officials abused their power to press forward with their own ideological agenda. Then, faced with a demand for accountability, they denied wrongdoing and sought to cover up their misdeeds. This is not a small-dollar lending story; this is a story of government agencies debasing their missions through the abuse of power.”

“Fortunately, the Community Financial Services Association, which I run, could afford the cost of a lawsuit and seek redress in the courts. CFSA was an original party to the lawsuit brought against the government and we participated in the preparation leading up to its filing in 2014. Our reasons for pursing a legal challenge to the actions of the FDIC and OCC were simple. First, we were seeking justice for our members who were harmed. Second, we were convinced there was a deliberate pattern of terminations of banking relationships that we wanted to bring to light. Third, if there was indeed a pattern, we’d be rendering a genuine public service by establishing the principle that no agency or group of people within an agency should be allowed to abuse their authority by exercising it in an unlawful or prejudicial manner. “

Here’s a link to the Full American Banker opinion piece by Dennis Shaul: Original

28
Nov

Bank Accounts for Payday Loan Lenders

Payday loan lenders and micro-lenders continue to suffer from “bank discontinuance” issues as a result of “Operation Choke Point” launched by the Obama administration in August 2013.

The Community Financial Services Association of America (CFSA) and Advance America said ” a preliminary injunction was needed to end the back-room campaign of coercion by the Federal Reserve, the Federal Deposit Insurance Corp, the Office of the Comptroller of the Currency, the CFPB [ruled unconstitutional by a D.C. Court]  and competitors masking themselves as so-called consumer protectionists.”

U.S. regulators are collaborating in an attempt to stop banks from offering banking services to micro-lenders in an effort to force consumers in need of emergency funding to beg, borrrow or steal when facing financial stress.

Nearly 50% of U.S. residents are unable to access $400 cash [Link to Federal Report] when faced with the need to fix their car to continue working, purchase a medical prescription for their child or a family member, turn on their heating or electricity…

Payday lenders, istallment lenders and additional small dollar lenders requested a federal judge for immediate relief! 

Jer Ayles-Ayler Trihouse Consulting

Jer TrihouseConsulting

The survival of mom and pop loan businesses is at stake!

It’s rumored that the big, multi-billion dollar online Fintech lending companies – SOFI, Lending Club, Prosper, Marcus, Avant, Enova… are adding additional pressure to wipe-out the small dollar lending industry; including the small independent store owners.

Advance America said its own situation became dire after five banks decided in the last month to cut ties, including a 14-year relationship with U.S. Bancorp, “putting it on the verge of being unable to maintain a bank account.”

The small lender national association injunction requests the federal court to “order the agencies to cease and desist from harming the reputations of Advance America and other CFSA members; from applying pressure on banks, encouraging them to terminate relationships with the banks and other CFSA members; denying CFSA members access to financial services; and from depriving members ability to pursue business.”

Instead of eliminating the “bad apples” of the payday industry, the agencies have “set about to choke off the life-sustaining financial oxygen that the entire industry, and millions of under-banked individuals, depend on.”

The CEO for CFSA, Dennis Shaul, stated that the results of Operation Choke Point for the payday loan, installment loan and micro-lending industry has been “dire.”

Mr. Shaul says that U.S. Bank has dropped its affiliation with several members, including Advance America, allegedly putting the company “on the verge” of being unable to maintain a bank account.

Another example by CFSA is thata smaller payday lender, DollarSmart Money Centers,  was forced to close when it lost all its banking services.

Here’s a link to the Injunction by the CFSA vs. the FDIC

Here’s a link to the Original Request

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06
Nov

Operation Choke Point, Payday Loans, Senator Cruz

Operation Choke Point

Payday loans, guns…

Senator Cruz takes “big Brother” to task! This is beautiful.

AG Nominee Stuart Delery is a weasel… Sen. Cruz Questions  AG Nominee Stuart Delery on Operation Choke Point.

05
Aug

Operation Choke Point Payday Lenders

Operation Choke Point Payday Lenders

Like Newt Gingrich or not, his assessment regarding the FED’s ability to make it impossible for legal industries to operate is accurate. “Operation Choke Point” has driven several of my clients to pay “finder’s fees” of as much as $45,000 to anyone able to introduce a willing bank or credit union to provide a basic depository account for payday loan, MSB, check cashers and car title loan lenders. These are legal, licensed businesses forced to pay “bribes” for a bank account. And, don’t jump to the conclusion that these “purchased” bank accounts are for abusing borrowers. I’m talking about simple depository accounts enabling a state/tribe licensed payday lender to pay their bills; payroll, vendors, rent, LMS providers…

Sure, you the reader are probably saying, “Good riddance!” But the FED’s are choosing the winners and losers. Today, they’ve chosen gun shops, small dollar credit lenders, collection companies… Tomorrow, it will likely be your industry, your job and your customer who will have their ability to bank “choked-off.”We offer 2 methods to invest in our “How to Start a Car Title Loan Business:”

Immediate download in Adobe Acrobat or choose our printed version. 3-Ring Binder, 8 1/2 X 11, 400+ pages, illustrated. NOTE: If you invest in the printed version, we will email a digital version immediately.



How to Start a Payday Loan Business

Start a Payday Loan Biz

For start-ups, hedge funds, investors, vendors, suppliers, legal counsel, media coverage, consumer advocates… anyone in need of, not only a discussion of Internet & brick-n-mortar licensing models, ACH, Internet & offline marketing, collections, software… but additionally a MACRO discussion of the AFS (Alternative Financial Services) industry.