Old: The Rule Of Law. New: You Will Do As We Say.
/You may think that the ongoing growth of the government, both in absolute size and relative to the rest of the economy, is perfectly OK. After all, it's just the neutral apolitical experts fixing a few market imperfections and chasing the bad guys. Of course they would never overstep the limits of their authority!
And then somewhere along the line regulators and prosecutors started to notice that big banks would settle literally any case, no matter how preposterous, and would pay big money to do it, in the process giving the regulator or prosecutor a chance for the big headlines. The guy who really got the game going was then New York AG Eliot Spitzer with his $400 million Citibank settlement in late 2002. After the financial crisis kicked off in 2008-09, every regulator and prosecutor in the country felt compelled to get in on the act. 2010 brought the Dodd-Frank Act, hundreds of new regulations and multiple new regulatory agencies, not least the unaccountable-to-anyone CFPB with its unlimited budget generated out of the ether at the Federal Reserve. By 2013 the likes of JP Morgan was seemingly settling one big investigation every couple of weeks, usually for at least a few hundred million, if not a few billion. In October 2013 JPM reported that even after all the settlements to that time, it had up a reserve of $23 billion to cover ongoing and future legal costs. Yes, if you are a prosecutor or regulator, if you order one of these banks to jump, the response will be, how high? Why should there be any problem with that?
And now we come to learn of something called Operation Choke Point. I first read about it in a post by Todd Zywicki at the Volokh Conspiracy on the Washington Post site on May 24. Zywicki states that the Operation has been "shrouded in secrecy," but he does link to previous mentions including one at Breitbart by Michael Patrick Leahy in January and another by Tom Blumer at bizzyblog on May 2. But the Operation has been going on for well over a year, since at least some time in early 2013.
The basic idea is that the Feds identify businesses that they somehow consider shady or undesirable, and then put pressure on banks to refuse to do business with these people. Note that "shady" and "undesirable" are not at all the same as "illegal." According to an article in The Hill on April 24, the mechanism of the pressure is "flooding payments companies . . . with subpoenas, civil investigative demands, and other burdensome and costly legal demands" :
The “chokepoint” in this operation is the nation’s payments infrastructure, the means by which merchants process nearly $5 trillion in consumer purchases in the U.S. each year. Federal law enforcers are targeting merchant categories like payday lenders, ammunition and tobacco sales, and telemarketers – but not merely by pursuing those merchants directly. Rather, 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.
An article in cryptocoinsnews.com in January identified some 30 industries targeted in the Operation to lose their sources of payments. The industries include such things as ammunition sales, coin dealers, dating services, escort services, firearms and fireworks sales, payday loans, online loans, online gambling, pornography, tobacco sales, and lots more.
There will be much more to be learned about this as the story continues to break. If there is one thing that the drug war has taught us, it is that the effort to shut a business down through "money laundering" enforcement only makes that business more profitable for those willing to take the bigger risks, drives out all semi-legitimate operators, and brings in the worst of the worst. And the drugs continue to be available.
But predicting that all these services will continue to be available does not mean that a world where prosecutors can torture anyone they want by taking away their ability to get paid is an OK world. One would think that there would be some sense of ethics that would kick in before an operation like this can get as far as it has gotten. Shouldn't high level people at these agencies be protesting, resigning, and taking the case public?
And in other news, we learn from the New York Times yesterday that the Obama administration is planning to institute a government rating system for colleges and universities. Well, there's a sure way to be sure that no criticism, no matter how slight, will ever come your way from that quarter! OK, all these guys in academia were totally on the government payroll already, so they were never going to stick out their necks and criticize the government anyway. But if you're the Obama administration, you're not going to take any chances. Everybody must be a lackey.
Every day they have more ways to make you do as they say.