2016: Schweikert Voted For A Bill That Restricted Regulators From Requesting Or Ordering A Bank To Terminate A Customer Account With Material Reason And Restricted The DoJ's Ability To Conduct Investigations And Seek Civil Penalties In Such Cases, A Response To The DoJ Program Known As "Operation Choke Point." In February 2016, Schweikert voted for a bill that would have, according to Congressional Quarterly, "prohibit[ed] federal banking agencies from requesting or ordering that a bank terminate a customer account without material reason. [...] Further, the bill would [have] limit[ed] the Justice Department's ability seek civil penalties involving financial institutions as well as its subpoena authority in such cases. It would [have] allow[ed] the attorney general to summon witnesses or require production of records either through court order or through personally signing, or delegating to no lower than the deputy attorney general, a subpoena, which would need to be supported by 'specific and articulable facts' that show reasonable grounds that the testimony would be relevant to an investigation." The vote was on passage. The House passed the bill by a vote of 250 to 169. The Senate took no substantive action on the bill. [House Vote 63, 2/4/16; Congressional Quarterly, 2/4/16; Congressional Actions, H.R. 766]
Operation Choke Point Was A DoJ Program In Collaboration With Federal Banking Regulators Designed To Protect Consumers From Fraudulent Practices. According to Congressional Quarterly, "Operation Choke Point was initiated in 2013 by the Justice Department, in collaboration with federal bank regulating agencies, to protect consumers from fraudulent practices under which funds could be withdrawn from consumers' bank accounts and provided to merchants without authorization by third-party payment processors who act as intermediaries between banks and merchants." [Congressional Quarterly, 1/29/16]
The DoJ Conducted Operation Choke Point Using Subpoenas From Section 951 Of FIRREA. According to Congressional Quarterly, "The Justice Department conducted Operation Choke Point using subpoenas issued under Section 951 of the Financial Institutions Reform, Recovery, and Enforcement Act (FIRREA; PL 101-73), the 1989 law enacted in response to the savings and loan crisis. Under Section 951, the Justice Department can prosecute using the legal burden of proof required for civil cases rather than criminal cases (i.e., the lesser standard of 'a preponderance of evidence' rather than proof 'beyond a reasonable doubt'). Section 951 also provides subpoena authority that enables the department to conduct extensive pretrial investigations without obtaining prior judicial authorization. The department used FIRREA to prosecute banks that issued the toxic mortgage loans that contributed to the 2008 recession and financial crisis. FIRREA also allows the Justice Department to issue subpoenas for investigations of violations 'affecting a federally insured financial institution' and to seek civil penalties based on those investigations." [Congressional Quarterly, 1/29/16]
Legislation Limits The DoJ's Ability To Conduct Investigations And Seek Civil Penalties From Section 951 Of FIRREA. According to Congressional Quarterly, "The bill limits the ability of the Justice Department to conduct investigations involving financial institutions and seek civil penalties by modifying the 1989 FIRREA law to restrict its Section 951 subpoena authority and remove the phrase 'affecting a federally insured financial institution.'" [Congressional Quarterly, 1/29/16]
Material Reason Would Apply To National Security Concerns. According to Congressional Quarterly, "A belief that the customer threatens national security would count as a material reason. The bill would require the agency to give the bank their request or order along with a justification in writing. As amended, the bill would require banks ordered to terminate a customer's account to inform customers of the justification. This provision would not apply if the account was ordered terminated due to national security concerns." [Congressional Quarterly, 2/4/16]
Bill Opponents Say That The Limit On The DoJ's Subpoena Ability Are Too Severe. According to Congressional Quarterly, "Opponents of the bill, primarily Democrats, say that while it includes beneficial provisions to prevent banking regulators from requesting that banks terminate their financial relationships with certain businesses, the bill's changes to Section 951 subpoena authority would too severely limit the Justice Department's ability to investigate financial institutions. The actions taken by the government against major banks after the 2008 financial crisis would not have been possible without the current FIRREA authorities, they say, and restricting those authorities would allow banks to once again engage in the same sort of reckless activities." [Congressional Quarterly, 1/29/16]