DOJ’s ‘Operation Choke Point’ May Be Root of Porn Star Bank Account Closings

Despite being in good financial standing,
adult film performers and others in the porn industry have had bank
accounts abruptly terminated—and
the U.S. Department of Justice (DOJ) may have had something to
do with it. 

Under “Operation Choke Point,” the DOJ and its allies are going
after legal but subjectively undesirable business
ventures by pressuing banks to terminate their bank accounts or
refuse their business. The very premise is clearly chilling—the DOJ
is coercing private businesses in an attempt to centrally engineer
the American marketplace based on it’s own politically biased moral
judgements. Targeted business categories so far
have included payday lenders, ammunition sales, dating
services, purveyors of drug paraphernalia, and online gambling
sites.

“Operation Chokepoint is flooding payments companies that
provide processing service to those industries with subpoenas,
civil investigative demands, and other burdensome and costly legal
demands,”
wrote Jason Oxman, CEO of the Electronic Transactions
Association, at The Hill. 

The theory behind this enforcement program has superficial
logic: increase the legal and compliance costs of serving certain
disfavored merchant categories, and payments companies will simply
stop providing service to such merchants. And it’s working—payments
companies across the country are cutting off service to categories
of merchants that—although providing a legal service—are creating
the potential for significant financial and reputational harm as
law enforcement publicizes its activities.  

Thus far, payday lenders have been the most frequent target. …
And if payday lenders are today’s target–what category will be next
and who makes that decision?

I’m not sure who made the decision, but it seems the next big
targeted category is the adult film industry. Last week, adult film
actress Teagan Presley and an unknown number of others in the porn
industry
received notices that their Chase Bank accounts were being
abruptly terminated. 

“When Presley went to the bank in
person to ask why, she was told it’s because she’s considered ‘high
risk,'” according to VICE News.
VICE’s Mary
O’Hara was the first to note a likely link between the
porn bank account closings and Operation Choke Point. The DOJ did
not respond to VICE News’ request for comment.  

For years, various government initiatives have been aimed at
reaching
the “unbanked” and “underbanked.” Federal officials claim to
want to help these individuals avoid high fees and other downsides
of nontraditional finanical services, but it’s hard not to suspect
these efforts have at least as much to do with wanting a record of
everyone’s financial goings-on. If the unbanked were such a real
concern, why would federal agencies be simultaneously encouraging
banks to drop more customers?

Targeting porn performers or not, Operation Choke Point
represents an incredible abuse of regulatory power. In a
recent American
Banker op-ed, former Federal Deposit Insurance Corp.
Chairman William M. Isaac called it “a direct assault on the
democratic system and free-market economy.”

In a March 2013 hearing before a Senate Banking
subcommittee, Sen.
David Vitter (R-La.) pointed out the obvious: that DOJ has
“no statutory authority” to be doing this. But why bother with
statutory authority when you can just secretly strongarm highly
regulated businesses into doing what you want? I’ve never been much
of a cryptocurrency evangelist myself, but I’m beginning to come
around…