Settlement Reached in Choke-Point Suit

According to a court filing last week, the Federal Deposit Insurance Corporation (FDIC) and the Office of the Comptroller of the Currency (OCC) have reached a deal with several payday lenders that could spell the end of a lawsuit over Operation Choke Point.

The filing specifically states that although “the FDIC’s senior management has not yet had an opportunity to review the agreement,” the parties have reached a tentative settlement and the FDIC does not expect to have any objections.

The FDIC issued a press release last week stating that the plaintiffs have agreed to dismiss the lawsuit. In exchange, the FDIC will issue the following:

• “A statement summarizing its longstanding policies and guidance regarding the circumstances in which the FDIC recommends that a financial institution terminate a customer’s deposit account and reiterating preexisting public guidance to financial institutions about providing banking services and carrying out Bank Secrecy Act obligations; and
• “A cover letter transmitting the statement to the plaintiffs that reiterates prior correspondence from the FDIC Chairman, summarizes applicable FDIC policy, and notes that the FDIC is conducting additional training of its workforce.”

The FDIC specified that neither the statement nor cover letter changes any of the federal regulators’ policies or guidance. The FDIC did acknowledge, however, that certain employees acted inconsistently with federal policy, especially when respect to payday lenders, and that “regulatory threats, undue pressure, coercion, and intimidation designed to restrict access to financial services for lawful businesses have no place at the FDIC.”