Durham Reporter

The Competitive Enterprise Institute (CEI), a libertarian think tank that advocates for free markets, limited government, and individual liberty, is calling for an investigation into the Federal Deposit Insurance Corporation’s (FDIC) Advisory Committee on Economic Inclusion.

The committee, which has ties to the Durham-based Center for Responsible Lending (CRL), is under scrutiny for potential conflicts of interest related to "Operation Choke Point 2.0."

The original “Operation Choke Point” initiative, launched during the Obama administration in 2013, pressured banks to sever ties with businesses deemed "high-risk" by regulators, including payday lenders and gun dealers. 

According to CCN, "Operation Choke Point 2.0" refers to an alleged initiative by U.S. government agencies to restrict banking services for cryptocurrency and certain tech industries. 

This is seen as a continuation of the original initiative, which targeted payday lending and firearms dealers by pressuring banks to sever ties, limiting these businesses' access to financial services.

Although the original “Choke Point” was officially ended in 2017 under the Trump administration, CEI contends that its principles have resurfaced in the Biden administration as "Operation Choke Point 2.0,” now allegedly targeting sectors like cryptocurrency.

Martin Eakes, founder of the Center for Responsible Lending (CRL), was involved in the original operation through his role on the FDIC Advisory Committee on Economic Inclusion, which played a key role in efforts to combat payday lending practices.

Iain Murray, vice president for strategy at CEI, has raised concerns about regulatory overreach and the use of "debanking" tactics to stifle certain industries. The CEI’s call for action focuses on government overreach in the financial sector, particularly in relation to industries that may be politically disfavored.

Murray called for a review of the FDIC's Advisory Committee on Economic Inclusion, where Eakes has had influence, to assess any potential conflicts of interest.

“I would certainly review the activities of that committee with a view to any potential conflicts of interest,” Murray said. “I would also look to re-establish the committee with a new mission of expanding the range of financial services available to underserved communities, rather than restricting them.”

Eakes and CRL have continued advocating for regulating small-dollar loans, including pushing for legislative restrictions on how lenders market their services in South Carolina, a move that has faced opposition from industry representatives. 

Critics argue that such efforts, supported by figures like George Soros and the Sandler Foundation, could limit access to credit and stifle competition.

Murray recalled that during the first iteration of Operation Choke Point, Community Development Financial Institutions (CDFIs) like CRL were active in efforts to limit small-dollar lending options, positioning themselves as the sole providers of such services.

“As I mentioned in my very first article on Operation Choke Point in 2014, there was certainly a push by CDFIs to establish themselves as the only player in town when it comes to small dollar loans,” he said. “I am, however, unaware of any similar activity in OCP 2.0, but that is not to say there has not been any. I would expect it to have taken place behind the scenes and off the record.” 

Murray said that while "Choke Point 2.0" may not explicitly use the same name as its predecessor, its effects are clear.

“Unlike Choke Point 1.0, I don’t believe the current Choke Point 2.0 has used such a title internally within the administration, which makes it harder to pin down,” Murray said. “However, I would ask all financial regulatory agencies to report their correspondence and actions on the subject of ‘reputational risk,’ and whether and how that was communicated as a concern to regulated banks.” 

Murray's concerns focus on the role of regulatory agencies, such as the FDIC, in shaping the financial landscape for industries that may be seen as politically disfavored. 

He pointed to the closure of Silvergate Bank—once a major player in the crypto sector—as one example of regulators using "safety and soundness" as a pretext to target legal but controversial industries.

“I would also particularly examine regulatory actions surrounding the regulation of banks with crypto interests on the ‘safety and soundness’ basis and how that may have influenced the closure of Silvergate and other banks,” Murray said.  

Murray added that David Sacks, the incoming White House A.I. & Crypto Czar, should specifically focus on identifying patterns of regulatory behavior that could indicate bias against certain industries.

"What Sacks should be looking for is patterns of behavior that involved regulators indicating that providing financial services to legal but disfavored industries would be frowned upon or lead to enhanced regulatory supervision. It is those patterns of behavior that need to be stopped," Murray said. 

In a broader call for reforms, Murray argued that the key to preventing this kind of regulatory overreach lies in greater discipline for regulators, rather than more stringent laws.

"As I have said, the end of Choke Point 1.0 was only a temporary victory because the model survived and was still available for use. What is needed is for the President and his agency heads to make it clear to regulators that such tactics will not be tolerated," Murray said. "An Executive Order should forbid any jawboning by regulators and require that all communications between regulators and regulated bodies be recorded and logged, especially when it touches on First Amendment-protected speech and association."

He also urged that new guidance be issued to reduce the emphasis placed on Know Your Customer (KYC) regulations, which he argued create an environment where banks treat customers as potential criminals, discouraging free association between banks and customers.

"Regulators should also issue new guidance that reduces the emphasis put on Know Your Customer rules to allow for free association between banks and customers without the assumption that anyone with complex financial affairs might be financing terrorism," he said. "As I say in this article, it is discipline on the regulators that is needed, rather than new regulations per se."

In an X post, Tesla CEO Elon Musk said, “Did you know that 30 tech founders were secretly debanked?” in response to a clip from The Joe Rogan Experience podcast featuring Marc Andreessen. Andreessen said, “We’ve had, like, 30 founders debanked in the last four years,” while discussing how Choke Point 2.0 impacts tech startups and individuals.

Custodia Bank CEO Caitlin Long said her company has been “debanked repeatedly” and referenced ongoing legal action, posting, “Keep an eye on our pending lawsuit against the Fed. Oral argument is scheduled for January 21” on X. 

Long’s comments follow discussions around Choke Point 2.0 and its effect on financial access for lawful businesses.

Sam Kazemian, founder of Frax Finance, shared on X that JPMorgan informed him they would close accounts where the primary source of income or wealth was tied to cryptocurrency. 

He claimed the directive came "directly from the top" at JPMorgan, referencing CEO Jamie Dimon. Kazemian added his name to the "debanked OCP list," emphasizing the reality of crypto-related debanking and expressing hope for a resolution.