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Group Affiliated with ‘Dangerous’ Operation Choke Point Now Lobbying to Regulate Fellow Lenders in the States

The Obama Administration’s “Operation Choke Point” was “one of the most dangerous programs” that former FDIC Chairman William Isaac said he had ever seen in his career as a bank regulator, wrote Isaac in The Hill in 2014.

A “non-profit” credit union magnate affiliated with that “dangerous” operation is now lobbying to regulate fellow lenders in states across the country, reports Palmetto State News.

Operation Choke Point, involving the Department of Justice and the Consumer Financial Protection Bureau, “sought to eliminate the ability of businesses that federal regulators deem distasteful, exploitative, or dangerous to obtain financing from major American banks,” reported the Washington Free Beacon in 2015, according to the report.

The Free Beacon reported that the operation’s critics said it was “designed to shut down legitimate businesses that the Obama administration opposes on ideological grounds by pressuring banks to stop lending to the classes of businesses it singles out as allegedly destructive or illegitimate.”

Also affiliated with that program was an “Advisory Committee on Economic Inclusion” formed in 2006 by the Federal Deposit Insurance Commission. A member of the inaugural committee was Martin Eakes, the founder of Self-Help Credit Union and its affiliated Center for Responsible Lending.

Among the legal businesses targeted by Operation Choke Point were gun stores, rare coin stores and … payday lenders.

The Free Beacon reported that, when the FDIC “floated the program,  Eakes said it could be used as a means to eliminate the competition.”

“Eakes ‘suggested that the most valuable outcome of the pilot project might be to convince policymakers that there is an alternative to payday loans, thereby making it more palatable to prohibit payday loans,’ according to minutes of the meeting,” reported the Free Beacon.

Eakes is no longer on the FDIC’s advisory committee, but the president of the Eakes-created Center for Responsible Lending, Michael Calhoun, is currently on the committee, reported Palmetto State News.

Eakes’ groups have been active in the state in pushing for restrictions on fellow lenders.

Two years ago, Eakes’ credit unions and the Center for Responsible Lending were involved in successfully lobbying for Illinois to enact a 36% rate cap. Last year, a study conducted by professors at Mississippi State University and Mississippi College and a member of the Federal Reserve Board of Governors found that access to loans decreased after enactment of the rate cap.

Specifically, the number of loans to subprime borrowers decreased by 38%.

These days, Eakes’ organizations are pushing for new restrictions on marketing by installment lenders in South Carolina, after failing to get a 36% rate cap passed in the previous session. “Front and center” in the lobbying effort is the head of Eakes’ credit union in South Carolina — Kerri Smith — who is concurrently running for in the Republican Primary for the State House against State Rep. Ashley Trantham (R-Greenville), a member of the state’s Freedom Caucus.

The fate of the South Carolina bill is unknown, but its apparent that Eakes is bringing his “network of business and advocacy groups” to bear which, reported the Free Beacon, “has cumulatively received more than $380 million in federal grants, loans, and other taxpayer assistance since 1996” and “has spent millions lobbying the federal government on measures including additional regulations on those lenders.”

Read more at Palmetto State News.

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Photo: WASHINGTON - NOVEMBER 13: CEO of the Center for Responsible Lending Martin Eakes (L) speaks as Executive Vice President and Chief Risk Officer for JPMorgan Chase Barry Zubrow (2nd L) listens during a hearing before the Senate Banking, Housing and Urban Affairs Committee on Capitol Hill November 13, 2008 in Washington, DC. The hearing was focused on "Oversight of the Emergency Economic Stabilization Act: Examining Financial Institution Use of Funding Under the Capital Purchase Program." (Photo by Alex Wong/Getty Images)