Executive Branch Bypasses Congress to Impose Financial Sanctions on… Legal Gun Dealers

I have already mentioned “Operation Chokepoint,” which is being used to blackmail banks and other financial businesses from offering their services to gun dealers. The Washington Times has followed up the story with a report on other ways in which the Executive Branch is using targeted sanctions against legitimate American businessmen because they sell guns.

Gun retailers say the Obama administration is trying to put them out of business with regulations and investigations that bypass Congress and choke off their lines of credit, freeze their assets and prohibit online sales.

Since 2011, regulators have increased scrutiny on banks’ customers. The Federal Deposit Insurance Corp. in 2011 urged banks to better manage the risks of their merchant customers who employ payment processors, such as PayPal, for credit card transactions. The FDIC listed gun retailers as “high risk” along with porn stores and drug paraphernalia shops.

The Justice Department is playing coy. They deny that they are unilaterally destroying legal businesses based on their sense of morality and their ability to do so. But they are plainly taking actions designed to pressure people into going out of business.

Congressional Republicans say the Obama administration is using its regulatory powers to shutter industries it doesn’t like. Last year, 31 Republicans accused the Justice Department and the Federal Deposit Insurance Corp. of intimidating banks and payment processors to “terminate business relationships with lawful lenders.”

In a March hearing before the Senate Banking, Housing and Urban Affairs subcommittee on consumer protection, Sen. David Vitter, Louisiana Republican, complained that several payday lenders — another industry labeled “risky” by the administration — were being dropped by their banks in his home state.

“There is a determined effort from [the Justice Department] to the regulators to cut off credit and use other tactics to force [payday lenders] out of business,” Mr. Vitter said. “I find that deeply troubling because it has no statutory basis, no statutory authority.”

In a House hearing in April, FDIC acting General Counsel Richard Osterman defended his agency’s definition of what constitutes a “risky” business — subject to money laundering or other criminal behavior — but made it clear that no bank is outright prohibited from serving any such companies.

“We have actually put out a policy statement on this issue to make it very clear from the very top that as long as financial institutions are properly managing their relationships and the risks, they’re neither prohibited nor discouraged from providing these services,” Mr. Osterman said.

But by treating them with suspicion, the Federal government is punishing them and, more importantly, anyone doing business with them. Would you do business with a person if you knew it would guarantee that you would be audited by the IRS for the next three years? Osterman is claiming the right to harass people out of business on the grounds that he has not “outright prohibited” any bank from serving such companies.

No, they don’t prohibit them from doing business with gun dealers; they just punish them for doing business with gun dealers. That’s a totally different thing, right?

In my opinion, the White House has not so much usurped authority as taken the mask off the past usurpation that the Federal Government has committed against the Constitutional balance of powers. President Bill Clinton could have done the same things in theory, I think. He just knew better than to try. He didn’t want people to lose faith in the Federal government.

President Barack Obama doesn’t care. His cult followers simply have no concept of keeping up appearances. They have power and they mean to use it.

So what will Congress do about it?