In another example of the ridiculousness of the GOP, representatives in the House are pushing a bill that would greatly hinder federal bank regulators’ ability to stop money laundering, “calling for changes in decades-old financial fraud standards in an effort to aid payday lenders,” reports the Huffington Post.
A bill introduced by Rep. Blaine Luetkemeyer (R-MO) would prohibit federal regulators from doing anything to “restrict or discourage” a bank from working with any company with both a business license and a “reasoned legal opinion” from a lawyer saying the company isn’t doing anything illegal.
“It’s completely whitewashing fraud,” said associate director of the National Consumer Law Center, Lauren Sanders. “There are licensed companies that commit fraud all the time, and everybody’s got lawyers who will try to justify what they’re doing.”
The bill seems to have come about as a response to the Department of Justice’s (DOJ) Operation Choke Point, which attempts to prevent money laundering by “scrutinizing banks and payment processors that facilitate transactions with illegal businesses — petty fraudsters running payday lending scams, sham telemarketing operations and other shady groups.”
The only industry that seems to be angry over Choke Point appears to be payday lenders, who filed a lawsuit against the Federal Deposit Insurance Corporation, the Federal Reserve, and the Office of the Comptroller of the Currency in June, according to HuffPo.
“Defendant agencies and DOJ knew early on that their coordinated, coercive campaign of backroom pressure tactics was succeeding in prompting banks ‘to exit or severely curtail’ business with all payday lenders,” the lawsuit said.
In a report released in May, Rep. Darrell Issa (R-CA), chairman of the House Oversight and Government Reform Committee, said that internal memos on Choke Point “clearly demonstrate that the Department’s primary target is the short-term lending industry — an indisputably lawful financial service.”
Except that it’s not.
Payday loan businesses are illegal in 15 states and required to follow regulations on interest rate limits and the number of loans given to consumers annually in other states. With the recent surge in online payday lenders, individual states are having a hard time regulating or shutting them down, something that the federal government is better equipped to handle.
Luetkemeyer’s bill would require the DOJ to get a court order to look at bank records instead of issuing a subpoena, hampering the department’s ability to stop illegal transactions.
This bill is simply a way to allow the financial industry to continue, and possibly increase, it’s illegal activities, all while protecting payday lenders that exist purely to prey upon consumers.