by Mitch Kokai
Senior Political Analyst, John Locke Foundation
The Obama administration is using aggressive new tactics to go after payday lenders in an effort to shut down part of an industry it targeted previously in Operation Choke Point.
The Department of Justice has used the mob-inspired Racketeer Influenced Corrupt Organization Act, known as RICO, to go after payday lenders in at least three different cases. Those cases involved Native American tribes providing online loans to people in a number of states at rates that exceed limits imposed by those states. Since the tribes enjoy immunity from federal prosecution for violating the interest rate limits imposed by states, the agency went after their partners and lawyers for conspiring with the tribes to break the limits.
“The government’s decision to extend RICO’s ‘collection of an unlawful debt’ language to online payday lenders is a significant moment in federal law enforcement,” American Banker said of the move. “If this new theory of law enforcement survives legal challenges, look for the government to continue using it in the online payday lending industry and potentially beyond.”
Those in the payday industry see the move as a follow-up to Operation Choke Point. During that effort the administration used the Federal Deposit Insurance Corporation to pressure banks not to extend credit or other financial services to certain industries. The effort was widely criticized and resulted in a congressional investigation. …
… Miller believes the Obama administration is unlikely to use the same RICO tactics against members of the gun industry. However, since payday loans and the sale of firearms were both targeted as “high risk” industries during Operation Choke Point, the move has raised concerns among gun rights activists.
Alan Gottlieb, founder of the Second Amendment Foundation, said his group is closely monitoring what the DOJ is doing in these cases. “Since gun rights advocates cannot trust the Obama administration we are watching this very closely,” he said. “It would not surprise me if they tried to use this approach to hurt sales of firearms or to blackmail people in the firearms industry as a way to get them to support their anti-gun agenda.”