“The Constitution protects us from our own best intentions. It divides power among sovereigns and among branches of government precisely, so that we might resist the temptation to concentrate power in one branch as the expedient solution to the crisis of the day.”
With those words more than two decades ago, Justice Sandra Day O’Connor eloquently gave a singularly accurate description of the very essence of our republic. Our greatest strength lies not in our universal enfranchisement, but in the constraint that we as a people place on our government. “Federalism,” she went on, “secures to individuals the liberties that derive from the diffusion of sovereign power”! [emphasis added]
As the founders predicted, and as we have continued to debate vigorously throughout the nation’s history, the trend for our federal government is to grow its own power, and to see that power concentrated by the federal executive branch. We try to diffuse it, and put checks on it, but there is nevertheless this impulse by Presidents (and their cronies) to grab more—and there is no greater example today than an effort called “Operation Choke Point”.
Normally, regulatory power operates in a manner that is both straightforward and complex. A system of processes known as the “Administrative Procedures Act” (APA) governs how the laws passed by Congress are interpreted by Executive Branch agencies, creating the body of rules known as the federal regulatory state. And because federal regulations can impact people in all walks of life, the APA exists as an additional check on power—to ensure that the rights of the individuals subject to rules and regulations are protected.
At its core is the concept of public participation and transparency—individuals (especially those subject to regulations) can comment on regulatory proposals, and make their case as to why a certain proposal should or should not be adopted, and what changes ought to be made. In fact, the APA mandates that agencies must address substantive comments in their “final rule”—showing what changes were made, given recommendations, or why a recommendation was not addressed. Failure to follow these rules creates an avenue for an agency’s decision to be challenged in court, and overturned.
But Operation Choke Point (OCP) does an end run around all that. It is a way for agencies to shut down individual businesses or entire industries, even when they have no legislative mandate to do so, and without going through the normal APA “notice and comment” rulemaking process.
A joint operation by the US Department of Justice, Treasury, the FDIC and the Consumer Financial Protection Bureau, OCP’s stated goal is to combat fraudulent financial transactions in industries the Administration claims have a high rate of fraudulent behavior. But when one reads the OCP target list, as created and released by the FDIC, one sees a political agenda at work—guns and ammunition manufacturers and dealers, payday lenders, even adult entertainers, all are on the list.
How OCP shuts down these businesses is deviously simple: federal regulators show up at banks and credit card payment processors, and under threat of regulatory investigation and action, “encourage” these institutions to shut down bank accounts and stop processing credit card payments for these businesses. Unable to bank or maintain cash flow, these businesses wither away and die—literally “choked off” from their cash, as the name of the operation suggests (and to be clear, “Operation Choke Point” is the name given to the operation by the federal regulators themselves!).
But because there is never an “order,” the agencies behind OCP have complete deniability—and, in fact, until public and congressional pressure was brought to bear on the project, they categorically denied that OCP was responsible for the numerous closures of bank and credit card processing accounts.
The pernicious nature of OCP is clear—whereas before OCP, if an agency wanted to shut down a business (or an entire industry), it would have to point to some precept in statute, figure out where the business had violated the law (or regulation), go through an investigation, possibly actually have to engage with the business so that the business could take steps to correct the defect or defend themselves… jump through a series of legal hoops that serve to protect the public’s interest. In many cases, the Constitution itself may expressly prohibit the federal government from wholesale interference in an industry (like the Second Amendment’s limitations on government’s power to interfere with the right to keep and bear arms).
So while the Second Amendment may protect gun rights, and while there are no federal laws categorically prohibiting either the sale or manufacture of firearms, OCP gives an anti-gun administration a procedure for destroying the entire industry. Without any need for passing laws, or having a public debate over the relative merits or wisdom, all an anti-gun administration need do is put pressure on a firearm or ammunition manufacturer or dealer’s bank or credit card payment processor, and then let that business simply die off!
Following a report by the Government Reform and Oversight Committee of the US House of Representatives that was highly critical of OCP, the various agencies involved in OCP declared that they were sharply curtailing it project’s operations. But this does not mean that OCP is over—far from it. All indications are that OCP is still alive and well at the CFPB, an agency notorious for its lack of accountability and for being used as a political cudgel by the administration for dealing with its enemies.
If allowed to stand, OCP represents a horrific vision of the future of governance—all an administration need do is declare the business of some group to be tantamount to committing fraud, and it gives them the pretext for having that business shut down. OCP has already targeted small charitable organizations, and it is not a great leap to imagine that a future progressive administration might declare skepticism to man’s role in climate change to be engaging in fraudulent behavior. This would open up organizations that do a host of free-market and limited-government advocacy to having their bank accounts shut down, their credit card payment processing stopped, circumventing the protections of the First Amendment and effectively killing them.
The Constitution protects us from our own best intentions. It is fairly clear that those who want to circumvent those protections, like those who created and manage Operation Choke Point, have intentions that are the furthest thing from “best”.
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