Imagine you have a thriving business and one morning you get a call from your banker explaining that he can no longer service your accounts. You try to open an account at another bank but are unable to do so. The bankers all tell you the same story: Regulators have told them that they should no longer serve you, and if they continue to do so they will face significant regulatory penalties—even though you’ve done nothing unlawful.
That’s what happened to many business owners as the result of an Obama administration policy called Operation Choke Point. In 2011 the Federal Deposit Insurance Corp. warned banks of heightened regulatory risks from doing business with certain merchants. A total of 30 undesirable merchant categories were affected, including purveyors of pornography or racist materials, gun and ammunition dealers, firms selling tobacco or lottery tickets, and payday lenders.
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