At an awards event recently, House Financial Services chairwoman Maxine Waters said: “It is an honor to now hold the chairwoman’s gavel. Yes, I’ve got the gavel, and I’m not afraid to use it.”
Given her continued desire to go after banks and undo the positive steps being made by the Trump administration to reform a once-rogue Consumer Financial Protection Bureau, these words are a troubling reminder of how Democrats have historically and vigorously embraced financial regulation.
The 2010 Dodd-Frank Wall Street Reform and Consumer Protection Act serves as a case in point. These efforts have not only produced unintended but nonetheless damaging consequences for many of the banks that the law was ostensibly written to protect but even more egregiously created a plan to try to cut off banking services to legitimate businesses the Obama administration thought were unsavory.
While regulation-hungry Democrats today remain bent on demonizing some entities that provide perfectly legal financial services even further, a recent push in the House of Representatives to help marijuana businesses access financial services more easily raises troubling questions about using federal legislation to facilitate the operation of businesses that are illegal at the federal level. This is worse than the typical efforts to use legislation to pick winners and losers in the marketplace.
The House Financial Services Committee recently voted in favor of “landmark” legislation to make it easier for banks to do business with entities that sell marijuana. Today, more than 30 states allow marijuana use in some capacity, either recreationally or for medical purposes.
I certainly understand the intent of the bill’s sponsors, Congressman Ed Perlmutter, D-Colorado, and Denny Heck, D-Washington, in the sense that the train has left the station in terms of the growing number of states that are legalizing this drug. What is bothersome, however, is that looking back at the way Democrats have mistreated some legal businesses in the past, it is confounding that they are now somehow fine with rewarding an industry that is still illegal at the national level.
In expressing concerns with the legislation, Congressman Blaine Luetkemeyer, R-Missouri, rightly pointed out that “if we are going to offer protection to businesses in contravention of federal law, the least we could do is protect those businesses operating in accordance with federal law.”
While an amendment offered to the bill by Luetkemeyer to include “legal entities operating in accordance with Federal law” failed, the congressman has long been a staunch and vocal critic of a sinister operation that was carried out during the Obama administration to try to destroy legal small businesses the administration felt were “objectionable.” This included such entities as gun shops and payday lenders, to name a few.
Called Operation Chokepoint, this campaign was an effort by the Federal Deposit Insurance Corp., the Office of the Comptroller of the Currency, the Department of Justice and the Consumer Financial Protection Bureau to intimidate and threaten banks that did business with these entities.
Last October, documents were unsealed that revealed eye-opening evidence of just how pervasive this operation really was, including an instance where an FDIC regional director threatened a bank chairman with potential criminal prosecution if the bank did not end a relationship with a particular legitimate business.
And, even though Democrats, including Waters, dismissed this operation, the financial and reputational damage done to some of these affected businesses was real and still remains today. As one Maryland gun store owner put it when she was told her bank couldn’t offer credit card processing services, “I felt like a criminal. I was humiliated and I felt like I was being demonized and discriminated against. I think it’s an abuse of power.”
Earlier this year, Luetkemeyer reintroduced legislation to put an end to Operation Chokepoint once and for all, calling his bill “a concrete solution to a bipartisan problem facing legal business owners across the nation.”
The government has no business trying to prosecute anyone who follows the law. Likewise, Congress should not be using legislation to push a political agenda by giving the evil eye to some businesses within the law, while turning a blind eye to others operating outside it.
My hope is that if the marijuana banking bill is going to continue to proceed with bipartisan support, then for the sake of the rule of law Congress should also heed Luetkemeyer’s wise words.