Federal prosecutors are trying to thwart the easy access that predatory lenders and dubious online merchants have to Americans’ bank accounts by going after banks that fail to meet their obligations as gatekeepers to the U.S. financial system, the New York Times reported today. The Justice Department is weighing civil and criminal actions against dozens of banks, sending out subpoenas to more than 50 payment processors and the banks that do business with them, according to government officials. In the new initiative, called “Operation Choke Point,” the agency is scrutinizing banks both big and small over whether they, in exchange for handsome fees, enable businesses to illegally siphon billions of dollars from consumers’ checking accounts, according to state and federal officials briefed on the investigation. The crackdown has already come under fire from congressional lawmakers, including Representative Darrell Issa (R-Calif.), who heads the House Oversight Committee, accusing the Justice Department of trying to covertly quash the payday lending industry. In the first action under Operation Choke Point, Justice Department officials brought a lawsuit this month against Four Oaks Bank of Four Oaks, N.C., accusing the bank of being “deliberately ignorant” that it was processing payments on behalf of unscrupulous merchants — including payday lenders and a Ponzi scheme. As a result, prosecutors say, the bank enabled the companies to illegally withdraw more than $2.4 billion from the checking accounts of customers across the country.
