Obama Administration Puts Money Squeeze On Gun Retailers

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The Obama Administration is waging a semi-successful campaign to burden firearms dealers with regulations and veiled scrutiny tied to the consumer credit industry to such an extent that retailers are scrambling, in some cases, to find a bank willing to process customers’ card-based transactions or even handle their merchant accounts.

According to The Washington Times, which reported on what appear to be a multi-pronged strategy emanating from the Administration to bureaucratically hamstring businesses that lawfully deal in firearms, small dealers in particular face the prospect of losing their business, thanks to banks cautious of the Department of Justice’s Operation Choke Point initiative, which ostensibly targets businesses that carry a “reputational risk.”

“[The] Justice Department has launched Operation Choke Point, a credit card fraud probe focusing on banks and payment processors. The threat of enforcement has prompted some banks to cut ties with online gun retailers, even if those companies have valid licenses and good credit histories,” the Times reported Sunday.

That places gun dealers – especially small mom-and-pop operations – in the same company as pornographers, sweepstake scammers and short-term loan sharks when it comes to setting up a bank account or merchant service agreement to accept card-based payment.

Here are some examples the Times listed of firearms sellers who’ve had close calls – or worse – with Operation Choke Point:

• T.R. Liberti, owner and operator of Top Gun Firearms Training & Supply in Miami, has felt the sting firsthand. Last month, his local bank, BankUnited N.A., dumped his online business from its service.

An explanatory email from the bank said: “This letter in no way reflects any derogatory reasons for such action on your behalf. But rather one of industry. Unfortunately your company’s line of business is not commensurate with the industries we work with.”

• Black Rifle Armory in Henderson, Nevada, had its bank accounts frozen this month as the bank tried to determine whether any of Black Rifle’s online transactions were suspicious.

• In 2012, Bank of America suddenly dropped the 12-year account of McMillan Group International, a gun manufacturer in Phoenix, even though the company had a good credit history, the owner said. Gun parts maker American Spirit Arms in Scottsdale, Arizona, received similar treatment by Bank of America, the country’s largest banking institution.

On top of that, banks have been clamping down on gun dealers following a 2011 warning by the Federal Deposit Insurance Corporation (FDIC) that takes aim at the firearms trade as a “high-risk” business category.

“Basically, what we’re saying is, these types of programs can be, can involve high-risk activities that could create litigation risk and reputation risk for financial institutions,” FDIC General Counsel Richard Osterman told a House panel last month. “So, they need to do due diligence to ensure that the folks who they’re banking are acting in a safe and sound manner.”

Does that apply even to the many mom-and-pop gun dealers who have been doing business “in a safe and sound manner” for decades without government-prompted institutional harassment?

In January, House Oversight Committee Chairman Darrell Issa (R-Calif.) was already condemning Operation Choke Point as a government scheme to regulate the legal payday loan industry out of business.

“The extraordinary breadth of the Department’s dragnet prompts concern that the true goal of Operation Choke Point is not to cut off actual fraudsters’ access to the financial system, but rather to eliminate legal financial services to which the Department objects,” Issa wrote to Attorney General Eric Holder. “…It appears the Department has indiscriminately targeted an access point to the financial system that countless legitimate merchants rely upon simply because it is ‘faster’ than targeting the actual perpetrators of fraud.”

Issa wrote that before the Operation’s other convenient regulatory uses came into full view. As a web of Federal regulations continues to tighten around the gun trade, his words now reflect what many small gun dealers are experiencing firsthand.

Ben Bullard

Reconciling the concept of individual sovereignty with conscientious participation in the modern American political process is a continuing preoccupation for staff writer Ben Bullard. A former community newspaper writer, Bullard has closely observed the manner in which well-meaning small-town politicians and policy makers often accept, unthinkingly, their increasingly marginal role in shaping the quality of their own lives, as well as those of the people whom they serve. He argues that American public policy is plagued by inscrutable and corrupt motives on a national scale, a fundamental problem which individuals, families and communities must strive to solve. This, he argues, can be achieved only as Americans rediscover the principal role each citizen plays in enriching the welfare of our Republic.

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