A 2013 Obama administration program called “Operation Choke Point” was put to an end by the Department of Justice last week. The program placed pressure on banks, encouraging them to stop handling payments for businesses that could be deemed a high risk for fraud, even if there was no prior wrongdoing. Firearms and ammo sellers ended up in the crosshairs.
As reported by Fox News, Operation Choke Point made it difficult for companies working in the gun sales, manufacturing, and importation spaces to secure and maintain banking services, even if the business had a history of being highly reputable.
The purpose of Operation Choke Point was to prevent fraud by limiting “high risk” organizations from having access to banking networks. The Department of Justice identified 30 businesses for the “high risk” category, lumping many firearms-oriented businesses in with the payday loan industry, pornography retailers, escort services, and those selling racist materials.
As a result, some firearms-oriented companies saw their accounts closed based on the program, and others struggled to find financing to support their businesses when the need arose.
As Ryan Cleckner, an attorney, stated, he believes Operation Choke Point gave the Obama administration a method to “put a clamp on the firearms industry without legislation.”
Mike Schuetz of Hawkins Guns in Wisconsin was notified by his credit union in November 2014 that his account was scheduled for closure. He taped a meeting with the manager of the credit union when he went in seeking answers. The manager stated, “We’re really not anti-gun as a company, but our hands are tied, and I feel horrible about this.”
Schuetz struggled to find a bank willing to let him open an account and ultimately found one 40 miles away from his local area. However, he stated he lost customers along the way and is still dealing with the repercussions of Operation Choke Point today.
Licensed gun auctioneer, Russ Farnsworth, or Montville Township, Ohio, had a similar experience when his bank severed their relationship with Farnworth last year.
Bill Edwards, who was looking to secure funding to allow him to build a shooting range in Raleigh, North Carolina, said his loan applications were rejected by over a dozen banks.
“We had a great business plan, and we would get turns down and not get any answers,” said Edwards. “We were dumbfounded. It’s kind of an unwritten rule: Don’t lend to firearms business.”
Operation Choke Point created a “regulatory environment that identified the [firearms] industry as riskier than others,” stated Camden Webb, a lawyer from Raleigh who assisted Edwards and other businesses deal with the requirements of Operation Choke Point.
According to Cleckner, the end of Operation Choke Point doesn’t guarantee that all banks will begin doing business with those working in the firearms industry, but he’s happy to see the program end.