The American Financial Services Association on September 25th submitted a letter to House Speaker Nancy Pelosi (D-CA) and Minority Leader Kevin McCarthy (R-CA) expressing its strong support for HR 1595, the bipartisan-backed Secure and Fair Enforcement (SAFE) Banking Act. Sponsored by Representatives Ed Perlmutter (D-CO), Denny Heck (D-WA), Steve Stivers (R-OH) and Warren Davidson (R-OH), along with more than 200 other members of the House, the SAFE Act in part ends Operation Choke Point. Specifically, it prohibits a federal banking agency from ordering a bank to terminate a banking relationship with a legal business unless there is a valid reason and that reason is not based solely on reputational risk.
The bill passed the House of Representatives that same day by a bipartisan margin of 321- 103.
“The ostensible intent of Choke Point program was to prevent criminal fraud. However, federal officials pressured banks to close accounts of businesses operating within state and federal law without legal recourse or due process solely because the officials were ideologically opposed to the businesses’ existence,” wrote AFSA President and CEO Bill Himpler.
The program was targeted at payday lenders and gun dealers but ended up ensnaring other businesses, including installment lenders, who found their often-longstanding banking relationships abruptly ended. While the program has officially ended, the effects remain; accounts are still being closed and affected companies are having difficulty having closed accounts reinstated.
“Legitimate bank customers, like traditional installment lenders, which have provided safe and affordable small-dollar credit to consumers in their communities for over a century, deserve fair access and fair treatment by federal banking agencies,” Himpler continued.
AFSA commends the co-sponsors and members of Congress for their support of the consumer credit industry. There is a companion bill in the Senate that has been referred to the Senate Banking Committee. We will continue to advocate for the legislation and keep AFSA members informed.
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