Update: Banks, Payday Loan Lenders and Operation Choke Point

Operation Choke Point

Obama Administration Last Gasp to Kill Payday, Installment, Guns, Dating, Escort Services…

In August of 2013, the payday loan industry was brought to its knees as a result of the revelation that the Obama administration launched “Operation Choke Point.”

The aim of “Operation Choke Point” is to sever bank relations with payday loan lenders, cash advance loans, dating services, escort services, gun sales ammo sales, coin dealers, credit repair services, fireworks sales, government grants, tobacco sales, marijuana sales, lottery sales, on-line gambling, surveillance equiptment and on and on and on…

How to Start Installment Loan Business

How to Start Installment Loan Business

It appears that the Obama administration, gasping for its last breath of oxygen, is doing everything possible to put an end to payday loans, installment loans, gun sales, ammunition sales, dating services, home based charities, Lotteries…

Wednesday, Advance America and the CFSA asked a judge for emergency relief from “Operation Chokepoint, lawyers included a written statement from Ed Lette, chairman of the Business Bank of Texas.

In an unusual display of straight forwardness, Mr. Lette shared how employees of Office of the Comptroller of the Currency “forced Mr. Lette to end a mutually beneficial, long-standing relationship with Power Finance Texas, a Texas-based payday lender.”

“Business Bank of Texas was forced to end this long-standing and beneficial relationship with Power Finance Texas by the Office of the Comptroller of the Currency,” Lette writes, adding:

“During a recent meeting with Scott Ward, an assistant deputy comptroller in the [Office of the Comptroller of the Currency’s] San Antonio office, Mr. Ward pressured our bank to end our relationship with Power Finance Texas. Mr. Ward told me that, if Business Bank of Texas continued to provide [automated clearing house] services to Power Finance Texas and other small lenders, the bank would incur a significant reputational risk. Although I completely disagreed with this assessment, Mr. Ward left no doubt that the relationship would have to be ended. The pressure that was brought to bear on our bank by our regulator left us with no choice but to drop Power Finance Texas as a customer and close its accounts.”

Even more astounding is the assertion by Orbert Michel, financial regulations expert at The Heritage Foundation and a vocal critic of Operation Choke Point, said it’s “very unusual” for bankers to publicly reveal internal issues they are experiencing with The Office of the Controller; VERY RISKY!

“So this statement is a very strong indictment of what’s going on behind the scenes,” said Mr. Michel.

During the past several months, gun shop owners have been loud and clear about the negative impact “Operation Choke Point” has had on their businesses. Their customers are screaming about their limited access to firearms and ammunition.

More than a few dating websites have experienced “bank discontinuence” as well because of “Operation Choke Point.”

And, as regular readers of our Newsletter know, “bank discontinuance” has been a significant problem for check cashers and money service businesses since the early 2000’s!

Payday loan lenders, installment loan lenders, car title loan lenders, tax preparers… aren’t the only industries complaining that “Operation Choke Point” targets their businesses unfairly. Tom Hudgins, chief operating officer  installment loan corporation Western Shamrock told The Daily Signal that his industry has felt the squeeze as well.

“Our funding sources continue to be squeezed and our banking relationships at local levels continue to be eliminated,” said Hudgins, who operates 300 locations in 19 different states. “It’s creating havoc.”

Hudgins said that, “There is some sentiment that there is a last-ditch effort to eliminate not just funding sources, but banking relationships for the installment loan lending industry.”

Per The Daily Signal, in some cases, Hudgins said he’s maintained relationships with banks for over 20 years, “and suddenly, those banks decide not to do business with us because they view us as a “reputational risk.”

Randy Dalton with 37 Banner Finance installment loan locations said, “One of our main lending institutions essentially cut us off from wanting to do business, and we had a relationship with them for over 50 years.”


Could be very good for us! Both Senators Ted Cruz, R-Texas, and Mike Lee, R-Utah, introduced legislation thatwould  kill “Operation Choke Point.” Both men are aligned strongly with the new Trump AG, Jeff Sessions.

Based on the renewed interest in the payday loan, installment loan and tax prep industry as measured by our own antecdotal increase in phone calss, emails, and “Bible” sales, President Trump is going to make it a certainty that consumers will continue to have plenty of financial choices and loans to solve their financial emergencies!

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