A bill has been introduced in the Senate that seeks to prohibit financial institutions from denying services to law-abiding businesses, such as companies in the accounts receivable management industry, as a means of ensuring crackdowns like Operation Choke Point never happen again.
The legislation, S. 1088, was introduced by Sen. Ted Cruz [R-Texas]. The bill is being cosponsored by Sen. John Cornyn [R-Texas], Sen. Kevin Cramer [R-N.D.], Sen. Thom Tillis [R-N.C.], Sen. James Inhofe [R-Okla.], Sen. Mike Braun [R-Ind.], and Sen. Mike Crapo [R-Idaho], the former chairman of the Senate Banking Committee.
Called the “Financial Institution Customer Protection Act of 2021,” the bill would prohibit financial institutions from terminating specific customer accounts or groups of customer accounts unless the institution had a material reason for taking such action and that the reason is not based on reputation risk to the institution. Financial institutions would only be allowed to terminate accounts if the customer poses a threat to national security, is involved in terrorist financing, or is on the state-sponsored terrorism list.
Operation Choke Point was put into place during the administration of former President Barack Obama that sought to cut off access to financial services institutions for different types of companies, normally considered to be engaged in unsavory activities. However, banks were closing the accounts of legitimate companies, including debt collectors, as part of their round-up. The initiative was officially terminated in October 2017, but some employees at federal regulatory agencies have been accused of continuing to secretly carry out the operation’s mission.
“I have fought against Operation Choke Point for a number of years because of its fundamentally flawed and unfair targeting of certain industries,” said Sen. Crapo, in a statement
