Buckeye Reporter

President Donald Trump has signed an executive order prohibiting banks from discriminating against firearms companies. The order, signed on August 7, targets practices that some previous administrations used to restrict access for gun businesses to banking services.

This action follows years of efforts by advocacy groups and politicians seeking to pressure financial institutions into ending relationships with the firearms industry. During Barack Obama's presidency, the Department of Justice (DOJ) and Federal Deposit Insurance Corporation (FDIC) implemented “Operation Choke Point,” which encouraged banks to stop working with gun-related businesses or charge them higher fees.

The Wall Street Journal reported that both the DOJ and FDIC made “informal” and “unwritten suggestions” urging banks to sever ties with these companies. Officials cited concerns about fraud and money laundering risks associated with firearms dealers, despite regulations requiring buyers to verify their identity and undergo background checks before purchasing a firearm.

These measures targeted legal businesses that were not suspected of criminal activity. Critics argued that the operation infringed on due process rights, pointing out that Congress reviewed substantial evidence related to these actions.

“I fear that activists at the DOJ and the FDIC are abusing their power and authority and are going after legal businesses and, in effect, they are weaponizing government to meet their ideological beliefs,” said Subcommittee chair Sean P. Duffy (R-WI) during a congressional hearing in March 2015.

Under Operation Choke Point, gun dealers were grouped with other so-called “high-risk” enterprises such as drug paraphernalia vendors, escort services, Ponzi schemes, and pyramid sales operations. The FDIC updated its policy in July 2014 following lawsuits and congressional scrutiny; however, Operation Choke Point continued until it was formally ended in 2017 after further legal challenges and oversight.

A congressional report stated:

“Forceful prosecution of those who defraud American consumers is both responsible and admirable. However, Department of Justice initiatives to combat mass-market consumer fraud must be legitimate exercises of the Department’s legal authorities and must be executed in a manner that does not unfairly harm legitimate merchants and individuals. Operation Choke Point fails both these requirements. The Department’s radical reinterpretation of what constitutes an actionable violation under § 951 of FIRREA fundamentally distorts Congress’s intent in enacting the law, and inappropriately demands that bankers act as the moral arbiters and policemen of the commercial world. In light of the Department’s obligation to act within the bounds of the law, and its avowed commitment not to ‘discourage or inhibit’ the lawful conduct of honest merchants, it is necessary to disavow and dismantle Operation Choke Point.”

Even after this program ended, anti-gun organizations continued pressuring banks through campaigns highlighting “reputational risk.” Some financial service providers like Elavon threatened to end relationships with companies selling partially completed firearm kits before regulatory changes by federal agencies such as ATF.

With President Trump's executive order now in effect, advocates say one avenue for restricting firearms commerce through banking policy has been closed.