WASHINGTON (2/6/15)--A bill limiting federal regulators' ability to pressure financial institutions to terminate specific accounts or restrict services to consumers was introduced Thursday and has CUNA support.
Rep. Blaine Luetkemeyer (R-Mo.) introduced the Financial Institution Customer Protection Act (H.R. 766), which would restrict enforcement of the U.S. Department of Justice's (DOJ) Operation Choke Point.
Operation Choke Point was introduced by the DOJ in 2013, and allows its Financial Fraud Task Force to investigate whether financial institutions and payment-processing companies were enabling fraudulent activity.
"We support the federal government's role in fighting fraud and ensuring the integrity of financial markets; nevertheless, we are concerned that Operation Choke Point's broad enforcement tactics could undermine effectiveness and create risks to consumers and the economy," said Jim Nussle, CUNA president/CEO, in a letter to Luetkemeyer supporting his bill.
"Operation Choke Point activities have resulted in some financial institutions suspending access to financial services for certain legal businesses."
Luetkemeyer's bill limits the ability of federal regulators to pressure a depository financial institution to terminate a specific member account. It would also prevent regulators from otherwise restricting or discouraging a depository institution such as a credit union from entering into or maintaining a financial services relationship with a specific customer unless certain criteria is met.
"Before any relationship is terminated with a credit union member, the regulator must have a material reason that is not based solely on reputation risk," Nussle wrote. "We believe this is a reasonable approach, and we support the legislation."
Just last week, the Federal Deposit Insurance Corp. issued a Financial Institution Letter encouraging institutions under its supervision to assess risk of individual customer relationships rather than take a wholesale approach of declining to provide banking services to entire categories of customers.
CUNA is seeking similar guidance from the National Credit Union Administration, both for credit unions and NCUA examiners.