We’ve been hearing rumblings about banks and financial institutions refusing to do business with members of the firearms industry for several years now. I wrote about this issue last year when one firearm company opened their own credit card processing company in response to the bigotry of their bank.
Recently, it has come out that the prejudice being displayed against firearm manufacturers, distributors and retailers is not just a reflection of some local or corporate official’s personal agenda, but rather a response to pressure coming down from banking regulators under the control of Eric Holder’s Justice Department.
What ostensibly began as programs to detect fraud and deny services to criminal enterprises like drug cartels and organized crime – to “choke off” their financial resources and ability to move money – seems to have morphed into an effort to choke out any business deemed unsavory by the Obama administration. Some specific targets of this effort have been identified as the pornography industry, businesses that sell pipes and other drug paraphernalia, and the firearms industry.
In recent years, regulators from the Federal Deposit Insurance Corporation, or FDIC, have been pushing banks to be more scrupulous about when and how they engage with these types of “high risk” businesses – particularly those using online processors like PayPal for financial transactions. On the enforcement side, the Justice Department has instituted a program they call Project Choke Point, which is supposed to root out credit card fraud and detect money laundering activities.
When investigators freeze assets, conduct audits and engage in other investigatory activities, they also disrupt the normal flow of a bank’s business. And these investigations and audits aren’t only looking at the banks’ customers; they’re actively looking for conspiracy on the part of the banks. With criminal and regulatory sanctions possible on the basis of “should have known,” this is not a situation any bank wants to find itself in. Consequently, banks try to stay ahead of regulators by enacting practices and procedures that make them both less susceptible to involvement in criminal activities, and less likely to be the target of deeper scrutiny from regulators. And so we have what may be the impetus for many banks and credit card processors to avoid doing business with firearms companies – or any other business that the administration has flagged as “risky.”
When you add in the political and social philosophies of some leaders in the financial industry, especially in the newer, Internet hot-shot companies like PayPal, it’s easy to see how this could provide a convenient excuse to advance a social/political agenda that actually hurts their own companies’ bottom lines. Whether the discriminatory policies of these companies are driven by government threats and coercion or an eagerness to cooperate for political reasons, the fact remains that this administration is using its legal and regulatory powers to encourage policies that cripple entire, legal industries. That’s just wrong.
It makes sense for regulators and law enforcement to keep an eye on and work with banks to combat fraud and other criminal activity, but a key purpose of banking regulations is to ensure the free flow of the legal market. Interfering with lawful businesses – driving productive businesses out of business, and using banking regulations to punish industries that are not popular with the president’s political supporters – is a wanton abuse of power, and is harmful to the nation and our economy.
We’ve already seen this president go after the coal industry, the lead industry, the offshore oil and natural gas industries and others by leveraging regulatory authority; now his minions have been discovered trying to choke out the firearms industry. And they’re doing this while at the same time reassuring banks that it is OK for them to work with state-legal marijuana-based companies, even though these businesses are still in direct violation of federal law. If this were George Bush going after pot businesses, solar energy, or Al Gore’s fraudulent “carbon offsets” scheme, the media would be having a fit about it, but since it’s Obama, and the targets are “evil” things like guns and carbon emitters, we hear almost nothing from the media. Only Emily Miller of the Washington Times and a few reporters for other “conservative” media, like WND, have even touched on the subject.
The Justice Department and FDIC say that they are not targeting any industries or trying to harm firearm businesses, but giving them the benefit of the doubt, regardless of their intent, the result remains that banks are less willing to do business with firearm companies due to fear of raising red flags with federal agents. That’s bad for business, bad for the economy and bad for the United States.
Media wishing to interview Jeff Knox, please contact [email protected].