A federal probe into alleged fraud against consumers is not trying to force banks to terminate accounts with short-term lenders and other businesses perceived as risky, officials insisted at a July 15 congressional hearing.
The Justice Department investigation, known as "Operation Choke Point," is focusing on whether banks and payment-processing firms are facilitating illegal activity, including offshore payday loans and debt resolution offers.
Several Republicans on a House Financial Services subcommittee argued that the probe is an effort by the Obama administration to target specific industries, and business lobbying groups contend that Choke Point has affected legitimate companies.
Stuart Delery, assistant attorney general for the Justice Department's civil division, said the agency is looking into "specific conduct, based on evidence that consumers are being defrauded, not to target whole industries or businesses acting lawfully." Daniel Stipano, deputy chief counsel at the Office of the Comptroller of the Currency, said the regulator does not "recommend or encourage banks to engage in the wholesale termination of categories of customer accounts." He noted that in rare cases, such as illegal activity, it may order the bank to cut off an account through a formal enforcement action.