Thursday, October 23, 2014

Darrell Issa Smells Another Obama Scandal In Bank Fraud Cases

WASHINGTON -- Congress is out of session and won't be back until Nov. 12. But that isn't stopping House Oversight Committee Chairman Darrell Issa (R-Calif.) from demanding that consumer watchdogs cough up an ocean of paperwork while he's out of town.

Issa has been waging a minor year-long crusade against a handful of Department of Justice investigations into petty consumer fraud. It hasn't caught on the way his probes into Benghazi and Lois Lerner have, but Issa has riled up his fellow House Republicans and issued a report claiming that DOJ's "Operation Choke Point," which seeks to cut off fraudsters from the banking system, is actually a secret Obama administration plot to destroy payday lenders, and maybe firearms dealers and other industries.

So far, Republicans haven't provided any evidence that any bank has ended any relationship with a legitimate firm due to pressure from Obama bureaucrats. But the investigation has created a lot of headaches for people at Justice and the FDIC who want to root out fraud from the financial system.

And now Issa and Rep. Jim Jordan (R-Ohio) appear to have set their sights higher. On Oct. 16, they sent letters to Federal Reserve Chair Janet Yellen and Comptroller of the Currency Thomas Curry claiming to have a new smoking gun, and demanding piles of documents from both agencies.

"The Committee on Oversight and Government Reform continues its oversight of a multiple federal agency initiative forcing banks to terminate the accounts of legal businesses disfavored by the Administration," Issa and Jordan wrote. "A compliance regime that forces banks to sever all relations with legal and legitimate customers is totally unacceptable."

Anti-money laundering laws have long barred banks from moving illegal cash through the financial system. Banks, as a result, have to keep tabs on their customers and make sure they aren't processing payments or harboring cash for organized crime, drug cartels or petty scammers. DOJ's Operation Choke Point focuses on petty fraudsters. Their first case, from January, documented a host of consumer horror stories from people being ripped off by payday lenders and Ponzi schemes. North Carolina's Four Oaks Bank had been giving carte blanche to transactions, even after recognizing a huge volume of suspicious activity, according to details in the lawsuit.

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