Payday Lenders Receive a Settlement Deal with FDIC

In a case that dates back to 2014, the FDIC announced that they have settled a D.C. federal court lawsuit by payday lenders that accused banking agencies of illegally pressuring banks to cut ties with payday lenders by using back-room pressure tactics and threatening banks with harsher exams and lower supervisory ratings if they kept serving payday lenders. The payday lenders also accused the agencies of violating their due process rights. The banking agencies initiative program, initiated by the U.S. Department of Justice, was known as “Operation Choke Point”. The FDIC said that this operation allowed employees to act in a manner inconsistent with the policies of the FDIC and that the conduct created misconceptions about the FDIC’s policies. The original intention of the DOJ program was to stop bad actors from accessing the U.S. banking system. Ultimately, it affected payday lenders, gun shops and other legal but politically disfavored businesses from being able to access banking services. The DOJ announced in August of 2017 that it had closed all cases in relation to the operation and that the initiative was no longer in effect.