Bill to reform secretive agency behind Operation Choke Point passes U.S. House (

By M.D. Kittle

Critics of the Consumer Financial Protection Bureau, the secretive, Obama administration-created agency that oversees the U.S. Justice Department’s Operation Choke Point, won a small but key victory this week.

The House on Wednesday passed the Bureau of Consumer Financial Protection Advisory Boards Act. The bill with the long name would require the director of the CFPB to create a Small Business Advisory Council within the shadowy agency and codify the previously established Credit Union Advisory Council and the Community Bank Advisory Council.

It now moves on to the Senate for consideration.

While the bill creates more layers of government, it provides what critics claim is some much needed , real-world counsel to an agency that operates with little oversight.

“An agency as powerful as the CFPB will benefit from the advice of small businesses, community banks and credit unions,” Financial Services Committee ChairmanJeb Hensarling, R-Texas, said in a statement. “The CFPB should listen to them so it can issue smart regulations rather than dumb regulations that harm Main Street America.”

CFPB, assisted by several other financial services regulators, has drawn political heat for its leadership role in Attorney General Eric Holder’s Operation Choke Point, an initiative targeting merchants that don’t fit into the Obama administration’s idea of what an American business ought to be.

Two retailers have told their horror stories about being caught in the cross hairs of the multi-agency effort ostensibly aimed at going after unlawful consumer fraud by “choking” off access to banking systems.

“Our vision is a consumer finance market place that works for American consumers, responsible providers, and the economy as a whole,” the Consumer Financial Protection Bureau’s website declares.

Critics say that vision is about picking winners and losers in the business world through an overreaching, harassing campaign.

Operation Choke Point was never intended to be made public, but that all changed last year when victims of abusive, heavy-handed tactics stepped forward.

“We’re looking at one of the most prolific abuses of power this (Obama) administration has been a part of,” said Brian Wise, senior adviser to the U.S. Consumer Coalition, in a Watchdog story last month. The coalition bills itself as a “grassroots organization that works to protect consumers’ right to access free-market goods and services.”

Operation Choke Point, Wise said, has served to limit consumer access as it interferes with legitimate businesses.

Proponents of the initiative and the CFPB assert the effort is about saving consumers from the clutches of predatory lending practices and a long list of other available, and legal, consumer products.

USCC knows of more than 100 cases of victims targeted by the DOJ, but the organization is confident there are thousands more under assault.

“Due to the lack of congressional oversight, and the unique funding and leadership structure of the CFPB, the Administration knows that it will make the perfect agency to carry on the legacy of Operation Choke Point. The Administration will continue to remove any obstacles in their way,” Wise said in a statement earlier this month.

The CFPB gets its funding transferred from the Federal Reserve. It is not part of the congressional appropriations process, a “perennial sore spot” for Republican lawmakers, according to a piece this week in American Banker.

Republican lawmakers attached an amendment to the bill creating the advisory boards that would cover the operational costs of those boards by cutting the CFPB’s budget. The measure, according to estimates, could cut the agency’s budget by as much as $100 million over the next 10 years.

“The bill before us today is just the latest instance of (House) Financial Services Committee Republicans snatching defeat from the jaws of victory,” Rep. Maxine Waters, D-Calif., ranking member on the banking panel, said during a heated debate Wednesday afternoon, according to a story in American Banker. “It makes clear their commitment to do all they can to undercut the Consumer Financial Protection Bureau — an agency with an extraordinary record of success protecting consumers, reining in bad actors, and ensuring that we do not return to the predatory practices that put this nation on the verge of economic collapse less than 10 years ago.”

But the U.S. Consumer Coalition said the bill brings accountability to an overreaching agency that has spent taxpayer resources harassing legal businesses.

“The CFPB’s current structure allows for it to make unilateral policy decisions with little regard to the concerns of American small businesses and consumers,” the coalition said in a statement. “(This) bill would ensure the participation of small businesses in advising and consulting the Bureau on emerging regulations.”