Yet More Overreaching By The Federal Government

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And now, another regulatory outrage from your federal government: “Operation Choke Point.” Have you heard of it? Operation Choke Point is the effort by the Justice Department to pressure banks into not providing banking services to companies in businesses the government deems to be shady (payday lenders are apparently a favorite) or outright illegal. The idea is that if these skeezy operators don’t have access to the banking system in the first place, they’ll be forced out of business.

All very innovative, law-enforcement-wise, you might be thinking to yourself. You would be wrong. If a company is engaging in a business that the government believes is illegal, the government should go after the company directly, and (legally) enlist the aid of the banking industry if it needs to. But if that same company is engaged in a business that’s legal but that the government merely finds distasteful, on what basis should it take any action at all? Take payday lending, for example. Eric Holder may not approve of it, but payday lending happens to be legal (and regulated to various degrees) in 37 states. Which is to say, the duly elected legislatures in those states have considered the matter, and have declined to put payday lending outside the bounds of legal commerce. That, as they say, should be that. That the Holder Justice Department is now trying to end-run the wishes of elected legislatures isn’t just wrong-headed. It’s offensive—and kind of creepy.

And don’t think that the feds are just targeting a handful of controversial financial services providers. In guidance aimed at helping banks manage their “reputational risk,” the FDIC has told banks it deems the following products and services to be associated with “high-risk activities,” and therefore suspect:

  • Ammunition Sales
  • Cable Box De-scramblers
  • Coin Dealers
  • Credit Card Schemes
  • Credit Repair Services
  • Dating Services
  • Debt Consolidation Scams
  • Drug Paraphernalia
  • Escort Services
  • Firearms Sales
  • Fireworks Sales
  • Get Rich Products
  • Government Grants
  • Home-Based Charities
  • Life-Time Guarantees
  • Life-Time Memberships
  • Lottery Sales
  • Mailing Lists/Personal Info
  • Money Transfer Networks
  • On-line Gambling
  • Pay Day Loans
  • Pharmaceutical Sales
  • Ponzi Schemes
  • Pornography
  • Pyramid-Type Sales
  • Racist Materials
  • Surveillance Equipment
  • Telemarketing
  • Tobacco Sales
  • Travel Clubs

Tobacco? Fireworks? To some of us—to a whole lot of us, actually—these aren’t shady activities to be flagged by the federal government; they’re among life’s great pleasures. Nor, given the rhetoric of the past few years, do you have to be a slippery-slope paranoid nutter to wonder where the de facto, non-due-process federal regulation of purveyors of “racist materials” might lead. The government even proposes to stand in the way of true love: did you notice that dating services are on the list, too?

This is insane. Oh, sure, you might not approve of things like escort services or sales of drug paraphernalia. That’s your right. If you feel strongly enough, lobby your legislator and try to make them illegal. But until that happens, it’s a free country. In the meantime, the government’s Operation Choke Point is, at best, nanny-statism that’s gone out of control. At worst, it’s a potential constitutional outrage.

What do you think? Let me know!