Operation Choke Point was an initiative during the Obama administration in which banking regulators, without any authorization from Congress, took legal businesses and told banks they should not lend to those businesses, according to Todd Zywicki. The businesses targeted were payday lenders and firearms dealers — “fundamentally just businesses that were unpopular with the Obama administration.” Bob Zadek added dating services to the list, and Zywicki noted that abortion clinics were not included, though they could be thought of as controversial. The Weaponization of Consumer Finance (2022)
The mechanism
The excerpts describe a two-part structure. First, banks are so intertwined with government — starting with deposit insurance — that government can exercise informal tools over them, particularly a power called supervision, under which the government can inspect a bank’s books and records and determine whether it is running the bank in what regulators consider a safe and sound manner. Zywicki said that power has been expanded over time to include things like ESG. The Weaponization of Consumer Finance (2022)
Second, the operative concept was reputation risk. Zywicki said regulators used “this idea called reputation risk,” and cited John Allison, described as the president of BB&T Bank for a long time and later president of the Cato Institute, who called it “regulation by raised eyebrow” — banks look at a client and ask whether they really need that particular client, whether a payday lender or a firearms dealer. Most of the time, Zywicki said, the banks just knuckle under, most people never know, and people’s bank accounts are canceled. The Weaponization of Consumer Finance (2022)
Bob Zadek’s framing of the same mechanism, in a later episode, emphasized the permission lever: banks need permission to do lots of things, such as acquiring another branch or another bank, so banks cannot really increase their profits without permission. Permission comes with conditions. Government let banks know informally, wink-and-nod, that it was more likely to give permission to acquire a branch if the bank started denying checking accounts to gun shops. The banks, recognizing the government’s power, began rejecting gun shops for deposit accounts; without a deposit account, an enterprise cannot transact business. The New Face of Government Censorship (2023)
In the earlier episode Zywicki described the same dynamic in terms of a broken binary: libertarians have long thought in terms of private business on one side and public government on the other, with the threat to liberty coming from government. In the world of the administrative state, that distinction does not hold, and banking is in many ways the apotheosis of the regulatory state. The Weaponization of Consumer Finance (2022)
Jawboning and the origin of the term
Will Duffield placed Operation Choke Point within a longer history of jawboning — government officials using informal pressure and threats to coerce private companies into censoring speech or restricting legal activities. Duffield traced the practice to the 1960s and early 1970s, when the executive branch tried to control prices during a time of record inflation by bullying producers, threatening them with fewer government contracts or stiffer regulation if they raised prices. That activity was likened, in a perhaps more religious society, to Samson’s vengeance against the Philistines in the book of Judges, where with the jaw of an ass he slays a thousand men; the speech of Presidents Kennedy and Carter was deemed the product of the jaw of an ass, yet it could slay the nation’s bankers and businessmen and keep them in line. ‘Jawboning against Speech’ with Will Duffield (2023)
Duffield said the activity the phrase describes has since moved from that financial space to things like Operation Choke Point — control through banks and financial intermediaries. Because banks are so strictly regulated already, the government has a lot of potential levers to punish a bank that is not willing to act on the state’s behalf. The more interaction a given industry has with the government, whether through regulation or government contracts, the more vulnerable firms within it are to jawboning. ‘Jawboning against Speech’ with Will Duffield (2023)
Wells Fargo and the de-banking of sex workers
In October 2022, Bob Zadek raised what he called the rebirth of Operation Choke Point, in the context of Wells Fargo’s treatment of sex workers. He described Wells Fargo’s action as indefensible, mean-spirited and senseless, and stressed that it did not seem to be governmental action — it was Wells Fargo’s action. “I’m From the Government and I’m Here to Help” - Cathy Reisenwitz (2022)
Cathy Reisenwitz said Wells Fargo dropped the accounts of several legal sex workers, telling them it would not serve them anymore and that they did not have access to their bank account. She described this as part of a huge, widespread, consistent pattern within the financial services industry to exclude and discriminate against even legal sex workers, citing Visa and Mastercard dropping Pornhub. In her account the conduct rests on the institutions’ own moral squeamishness — deciding they do not like sex workers or the sex industry and so will not serve them. She said it is extremely harmful to all sex workers, especially the most marginalized, who will have the hardest time recovering; it makes no one safer, makes people worse off, and hits the marginalized hardest, all so the institutions can feel morally pure. “I’m From the Government and I’m Here to Help” - Cathy Reisenwitz (2022)
Zadek’s account of the original operation, delivered in the same exchange, was that government sought to put out of business lawful activities the federal government did not approve of — the example being a gun shop obeying all the laws and licenses, careful in its record-keeping, selling a lawful product. Government encouraged banks to close the accounts of gun shops by declaring that having a gun shop as a customer was an unsafe and unsound banking practice and that the activity threatened the institutional reputation of the bank. Zadek called the standard general and described the practice as obscene overreach of government against a group underrepresented in voting power and not favored in many of the public’s eyes. He said the Wells Fargo development was stealthy — no real press release, it just came out — and had been in the news perhaps ten days earlier. “I’m From the Government and I’m Here to Help” - Cathy Reisenwitz (2022)
Across episodes
The topic recurs across four episodes spanning October 2022 to February 2023, and the excerpts show a consistent treatment rather than a development: Zywicki supplies the account of the original Obama-administration initiative and its supervisory machinery; Zadek supplies the permission-and-wink-and-nod mechanism and the Wells Fargo revival; Reisenwitz supplies the de-banking of legal sex workers as the pattern’s continuation; and Duffield supplies the jawboning lineage from 1960s and 1970s price controls. The same two episodes of the Reisenwitz interview appear in the source set under different ids, and the excerpts are otherwise identical in substance.
What the sources do not cover
The excerpts do not state when Operation Choke Point began or ended, which agency or agencies ran it, or whether it was formally terminated. They do not name any statute, regulation or court decision upholding or invalidating it, and they do not say what legal authority, if any, regulators invoked. No figure is given for the number of businesses or accounts affected, and the excerpts do not describe any congressional response.