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It looks like a new front has opened up in Cliven Bundy's war against the US government.
This Saturday, angry residents of San Juan County, Utah, plan to illegally ride their ATVs through Utah's Recapture Canyon—an 11 mile-long stretch of federal land that is home to Native American archeological sites—because they don't think that the federal Bureau of Land Management should have designated that land off-limits to motor vehicles. The protest was meant to be a local affair. But on Thursday, Bundy, the rancher who wouldn't pay the feds grazing fees and sparked a gun-drenched showdown in Nevada, called on his supporters to join the anti-government off-roading event, E&E Publishing's Phil Taylor reported. Bundy, whose crusade against the federal government became tainted by his racist comments, is looking to spread the cause from cattle to cross-country cruising.
"We don't expect any violence," San Juan County Sheriff Rick Eldredge told the Denver Post last week. Others aren't so sure, especially since the out-of-staters in attendance could help rile things up—which is what happened during the Bundy stand-off. "This may blow up to be significantly more than they thought," Bill Boyle, a resident of San Juan and publisher of the San Juan Record newspaper told the Post. "I think there are those who would like everyone with an AK-47 to be here."
San Juan County residents who plan to attend Saturday's event are Bundy supporters and Ted Nugent fans, according to an analysis of their Facebook pages by the Denver Post. They also hate President Barack Obama and Senate majority leader Harry Reid, according to the newspaper, which reports that "BLM employees in San Juan County have had windows shot out of their homes and their yards torn up by ATVs in the middle of the night."
The BLM made the Recapture Canyon land off limits in 2007 because ATVs were damaging the land and folks were vandalizing Native American sites. San Juan County Commissioner Phil Lyman, who is organizing Saturday's protest, does not believe the feds have the authority to protect cultural resources. He says the goal of the ride is to reassert county jurisdiction in the face of federal "overreach," according to the Salt Lake Tribune. Federal overreach was the theme that Bundy's champions in the national conservative media repeatedly pressed—until Bundy's racist comments became news.
Local officials do not have a good estimate of how many mad-as-hell ATV riders will show up to zoom through sacred Native American land on Saturday. But the BLM has decided to stand back and avoid a conflict for now, as it did several weeks ago on the Bundy ranch in Nevada. Utah's BLM director Juan Palma, however, said there will nonetheless be consequences for the anti-government activists. "The BLM-Utah has not and will not authorize the proposed ride and will seek all appropriate civil and criminal penalties against anyone who uses a motorized vehicle within the closed area," he said in a statement.
Sen. Elizabeth Warren (D-Mass.) slammed House Speaker John Boehner (R-Ohio) for creating a select committee to investigate the deaths of four American officials in Benghazi. In an e-mail to supporters Friday, Warren called the committee "shameful" and "no-holds-barred political theater," accusing the GOP of exploiting a tragedy for political gain. And for Warren, it's a bit personal.
In the email, Warren notes that she is particularly concerned about Boehner's selection of Rep. Trey Gowdy (R-S.C.) to chair committee. She recalls testifying before Gowdy in 2011 when she was setting up the Consumer Financial Protection Bureau. "I know a little bit about the way Trey Gowdy pursues oversight," she writes. "I was on the other end of it when I was setting up the new Consumer Financial Protection Bureau and I was called to testify before the House."
Warren says Gowdy lacked basic knowledge of the new agency and was a grand-stander, pushing empty political points rather than conducting a serious investigation. She goes out of her way to make Gowdy appear foolish, quoting a Huffington Post account of the hearing that describes Gowdy as mistakenly suggesting that Warren had written rules that were, in fact, direct quotes from a bill passed by Congress.
As a Senator, I take oversight seriously because it is powerfully important. But Trey Gowdy gives oversight a bad name. The House GOP is on a waste-of-time-and-resources witch hunt and fundraising sideshow, shamefully grasping for any straw to make President Obama, former Secretary Clinton, or Secretary Kerry look bad. This stunt does a disservice to those who serve our country abroad, and it distracts us from issues we should be taking up on behalf of the American people.
With millions of people still out of work and millions more working full time yet still living below the poverty line, with students drowning in debt, with roads and bridges crumbling, is this really what the House Republicans are choosing to spend their time on? Even for guys who have so few solutions to offer that they have voted 54 times to repeal Obamacare, this is a new low.
Democrats are currently debating whether they should boycott the new committee. Unlike past panels of this sort, the Benghazi committee does not have equal representation from both parties, skewing seven-to-five in favor of the Republicans. Though Warren wouldn't have any direct involvement—the committee is a House-only project—her e-mail blast makes it clear that she's siding with her House counterparts who think the investigation is a sham.
On Thursday, Rep. Cedric Richmond (D-La.) introduced a bill that would require a federally appointed commission to study the use of solitary confinement in US and state prisons and juvenile detention facilities and recommend national standards to reform the practice and ensure it is only "used infrequently and only under extreme circumstances." The attorney general would be tasked with implementing these standards. The legislation has six cosponsors, all Democrats, and comes on the heels of a number of states, including Maine, New Mexico, Nevada, and Texas passing their own bills to study the practice.
Tens of thousands of Americans are held in solitary confinement each year. Some have been in solitary for decades. "Our approach to solitary confinement in this country needs immediate reform," Richmond said in a statement Thursday. "Do we feel comfortable putting a man or woman in a dark hole for decades on end with no additional due process? Is this practice consistent with our values? I don’t think so. I know we are better than that."
Richmond's bill says that the federal commission must recommend standards so that the use of solitary confinement is limited to fewer than 30 days in any 45-day period, unless the head of a corrections facility determines that prolonged solitary confinement is necessary for the security of the institution, or if the prisoner requests it. The proposal would require that prisoners receive "a meaningful hearing" with access to legal counsel before being placed in long-term solitary confinement, and entitle them to have their cases reviewed every 30 days.
The national standards required by the bill would include a number of other reforms, including limiting the use of involuntary solitary confinement to "protect" vulnerable individuals—for example, prisoners who are transgender—and improving access to mental health treatment for prisoners placed in solitary. The legislation also mandates that correction officials avoid placing juveniles in solitary for any duration, "except under extreme emergency circumstances." (Between April and September of last year, four juvenile correctional facilities in Ohio imposed almost 60,000 hours of solitary confinement on 229 boys with mental-health needs.) The bill requires the attorney general to publish a final rule adopting the national standards, and would reduce federal grant funds given to states for their prison programs by 15 percent each year until the states comply with the new standards.
A United Nations torture expert said in 2011 that solitary confinement should not be used for more than 15 days. Richmond's bill does not embrace that recommendation. But human rights groups say the bill is a great first step, and recommend its passage. "The introduction of this legislation will help us take a step toward more humane prison practices and shine a light on the tens of thousands of human beings condemned to suffer in prolonged solitary confinement," said Jasmine Heiss, senior campaigner at Amnesty International USA, in a statement.
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Democrats plan to use a student loan bill introduced Tuesday by Sen. Elizabeth Warren (D-Mass.) as a wedge issue in the 2014 midterm elections, forcing Republican candidates to either support it or explain why they don't. Dem strategists think Warren's legislation—which would lower interest rates on most federal student loans below 4 percent, reducing millions of Americans' bills by hundreds or thousands of dollars a year—could help turn out young people, who tend to vote for Democrats. Fifty-seven percent of Americans ages 18 to 24 say student loan debt is a "major" issue for them, according to a recent Harvard poll.
Senate Democrats plan to hold a vote on Warren's bill, or a version of it, it early June, and to hold Republicans who vote against it accountable. The bill, which would be funded by eliminating tax breaks on millionaires, is one plank in what Democrats have dubbed their "Fair Shot Agenda," an election year slate of proposals aimed at highlighting Republican opposition to politically popular legislation. (The Fair Shot campaign also includes raising the minimum wage and equal pay legislation, measures Senate Republicans have blocked.)
Some Dems are already on the attack. Sens. Al Franken (D-Minn.) and Brian Schatz (D-Hawaii), as well as Shenna Bellows, who is running against Sen. Susan Collins in Maine, and Rick Weiland, who is hoping to replace outgoing Democratic Sen. Tim Johnson in South Dakota, are holding events this week aimed at pressuring their Republican opponents to support Warren's legislation—or embarrass themselves by publicly opposing it.
Warren's student loan bill "is a perfect messaging item for the Democrats," says Ross Baker, a professor of political science at Rutgers University. He expects Democrats to continue to use the student debt issue to hammer Republicans, who generally oppose debt relief, over the next six months. "Republicans, in general, will oppose [Warren's bill]," Baker adds, which he says could raise the ire of young voters—a large portion of whom are currently expected to sit out this election—and push them to the polls.
Adam Green, the cofounder of the Progressive Change Campaign Committee, a liberal PAC that supports progressive candidates and calls itself the "Elizabeth Warren wing of the Democratic Party," says that Warren's bill is already having an effect. His group has launched a national petition in support of Warren's bill, which the group is sending to all Republican Senate candidates this week. The progressive PAC is also organizing events aimed at pressing four more Senate GOP candidates on the student loan issue.
The PCCC is not the only outside group hoping use student loan debt to take down GOPers. In April, Student Debt Crisis, a group that advocates for student loan interest rate reform, nominated Rep. John Kline (R-Minn.) for television host Bill Maher's "Flip-A-District" contest, a campaign Maher launched to find the worst member of Congress and boot him from office. The group chose Kline because he is one of the few members of Congress who has proposed raising student loan interest rates. A few weeks after the group entered Kline in the running, he shot from 75th to first on Maher's list of terrible lawmakers.
Last year, GOP senators filibustered student interest rate relief before acquiescing to a compromise bill at the 11th hour. That legislation prevented interest rates on new federal loans from doubling to 6.8 percent. But the law didn't do anything to help the 40 million Americans swimming in existing student loan debt, some of whom are paying back loans with rates of up to 10 percent. Warren's bill—cosponsored by 23 other Senate Democrats—would reduce most of these Americans' federal student loan interest rates to the current rate on new undergraduate loans: 3.86 percent.
Even if her bill is approved by Congress this year, Warren says she will keep pushing for further debt relief for students. She says she'll only stop when the government no longer profits off student debt. The feds will rake in $66 billion in revenue on the federal student loans the government doled out between 2007 and 2012. As Warren said on the Senate floor Tuesday, "Those are the kind of interest rates that would make a Fortune 500 CEO proud."
Watch Warren's full floor speech on the bill here:
Late last month, the Federal Communications Commission announced that it would propose new rules allowing companies like Netflix or Google to pay internet service providers (ISPs) like Verizon or Comcast for faster data lanes to deliver video and other content to their customers. In other words, the FCC was proposing to replace net neutrality—the egalitarian internet that we all know—with a pay-to-play platform designed to favor the biggest and richest players.
The backlash online was so huge, swift, and predictable that one might wonder what the hell the FCC bureaucrats were thinking. Could a handful of powerful companies really matter more to the commission than pretty much everybody else who uses the internet? The charts below show how a few wealthy special interests wield huge sway within the FCC, particularly with regard to the net neutrality debate. But first, a quick refresher on what net neutrality means:
Proponents of net neutrality, also known as the open internet, fear that allowing a fast lane on the web would hurt startups, nonprofits, activists, and anyone else who couldn't afford to pay the toll. Bigger tech companies such as Google also tend to favor net neutrality, though sometimes more for the sake of public relations than principle. But, you might ask, since the internet is already quite fast today compared with a few years ago, is a few seconds' difference in the time needed to load a web page really all that important? Actually, yes, it is. Here's why:onlinegraduateprograms.com
This might be one reason Barack Obama visited the Googleplex during his first presidential campaign and painted himself as one of net neutrality's staunchest defenders.
Obama's first pick to lead the FCC, Julius Genachowski, was initially a strong proponent of net neutrality. Genachowski made a video explaining why he wanted to reclassify ISPs as "telecommunications services," a legally bulletproof way of preserving an open internet that had long been favored by consumer groups. But he ultimately backed off in the face of an onslaught of lobbying by ISPs. By then their main trade group, the National Cable and Telecommunications Association (NCTA), was spending about 95 times more money lobbying the FCC than the Internet Association, which represents the tech companies that favor net neutrality.
Last May, two months after Genachowski stepped down, Obama replaced him with Tom Wheeler, a veteran telecommunications lobbyist who'd served as president of the NCTA before taking the helm of the Cellular Telecommunications and Internet Association (CITA), the lobbying arm of the wireless industry. Obama called him "the Bo Jackson of telecom." The New Yorker's John Cassidy suggested that a more apt sports metaphor might have been "to compare him to one of the lawyers who helped finagle a lucrative anti-trust exemption for professional football and baseball."Associated Press & Susan Walsh/AP
Did Obama like that Wheeler represented two of the most powerful groups that oppose net neutrality, or could he have picked him for some other reason? See below.
It's too early to say whether Wheeler's new net neutrality rules will be the nail in the coffin for an open internet. The FCC won't officially reveal them until May 15 (or later), and even then, a lot will depend on the FCC's discretion. Wheeler has said that the commission won't allow ISPs to "act in a commercially unreasonable manner to harm the internet," but what, exactly, does that mean? Is it commercially unreasonable to price the little guys out of faster internet service, or to effectively force people to pay more to watch House of Cards? Who knows? The only certainty is that Wheeler's former employers, the ISPs and wireless carriers, will flood the zone with lobbyists.
With a few notable exceptions, you can assume that tech companies, consumer groups, and content producers favor net neutrality, while ISPs oppose it. Which is to say, if the lobbyists have their way, the future clearly lies in net discrimination.
Often it's the little things coming out of Washington, obscured by the big, scary headlines, that matter most in the long run. Items that scarcely make the news, or fail to attract your attention, or once noticed seem trivial, may carry consequences that endure long after the latest front-page crisis has passed. They may, in fact, signal fundamental changes in Washington's priorities and policies that could even face opposition, if only we paid attention.
Take the current case of an unprecedented, unkind, under-the-radar cut in the State Department's budget for the Fulbright Program, the venerable 68-year-old operation that annually arranges for thousands of educators, students, and researchers to be exchanged between the United States and at least 155 other countries. As Washington increasingly comes to rely on the "forward projection" of military force to maintain its global position, the Fulbright Program may be the last vestige of an earlier, more democratic, equitable, and generous America that enjoyed a certain moral and intellectual standing in the world. Yet, long advertised by the US government as "the flagship international educational exchange program" of American cultural diplomacy, it is now in the path of the State Department's torpedoes.
Right now, all over the world, former Fulbright scholars like me (Norway, 2012) are raising the alarm, trying to persuade Congress to stand by one of its best creations, passed by unanimous bipartisan consent of the Senate and signed into law by President Truman in 1946. Alumni of the Fulbright Program number more than 325,000, including more than 123,000 Americans. Among Fulbright alums are 53 from 13 different countries who have won a Nobel Prize, 28 MacArthur Foundation fellows, 80 winners of the Pulitzer Prize, 29 who have served as the head of state or government, and at least one, lunar geologist Harrison Schmitt (Norway, 1957), who walked on the moon—not to mention the hundreds of thousands who returned to their countries with greater understanding and respect for others and a desire to get along. Check the roster of any institution working for peace around the world and you're almost certain to find Fulbright alums whose career choices were shaped by international exchange. What's not to admire about such a program?
Yet the Fulbright budget, which falls under the State Department's Bureau of Educational and Cultural Affairs (ECA), seems to be on the chopping block. The proposed cut amounts to chump change in Washington, only $30.5 million. But the unexpected reduction from a $234.7 million budget this year to $204.2 million in 2015 represents 13 percent of what Fulbright gets. For such a relatively small-budget program, that's a big chunk. No one in the know will say just where the cuts are going to fall, but the most likely target could be "old Europe," and the worldwide result is likely to be a dramatic drop from 8,000 to fewer than 6,000 in the number of applicants who receive the already exceedingly modest grants.
Whistleblower Suit Alleges Corruption, Cronyism, and Affairs in Gov. Susana Martinez's Administration
A recently unsealed whistleblower lawsuit filed in New Mexico state court makes a series of explosive allegations against appointees of rising GOP star Gov. Susana Martinez, accusing high-ranking officials in her administration of public corruption, mismanagement, and intimidation. It claims that officials at the state's economic development agency engaged in extramarital affairs that could expose the state to sexual harassment charges and that officials tried to silence employees who reported contracting violations and other wrongdoing.
The 22-page complaint—filed February 10 on behalf of two former state employees—claims that a company co-founded by Martinez appointee Jon Barela, secretary of the New Mexico Economic Development Department, secretly benefited from a state tax credit program. The complaint also alleges that aides to Martinez instructed a state employee to use his personal email for sensitive government work to avoid being subject to public records requests; that Barela and his deputy, Barbara Brazil, ignored waste and mismanagement at the state's Spaceport project in southern New Mexico; and that Brazil ran several Dairy Queen franchises she had an interest in "while simultaneously being paid by the State of New Mexico."
In mid-April, more than 300 schoolgirls were kidnapped from Chibok boarding school in northern Nigeria by gunmen from the Islamist sect Boko Haram. Three weeks later, most of those girls are still missing. More than a week ago, a group of Nigerians launched the Twitter campaign #BringBackOurGirls, sparking global outrage over the attack. And on Tuesday, Secretary of State John Kerry offered to send a team to help rescue the children. Meanwhile, Nigeria's nightmare gets worse by the day: On Monday, the leader of the group, which has terrorized the country for years, threatened to sell the girls off as slaves, and on Tuesday, Boko Haram kidnapped another eight girls. But let's back up a minute. What is Boko Haram, exactly? And why do its members kidnap schoolgirls?
What is Boko Haram? Boko Haram is a group of Islamic fundamentalists based in northern Nigeria that has been terrorizing the country since 2009. The group believes Western culture is sinful and wants to return the country to the pre-colonial era of Muslim rule. To that end, Boko Haram has attacked government targets, including military checkpoints, police stations, highways, and schools, as well as churches, mosques, the UN building, and, recently, a bus station in the capital city of Abuja. Over the past five years, Boko Haram has slaughtered roughly 5,000 Nigerians whom the group viewed as pro-government. Here is a map of Boko Haram attacks over the years, via Business Insider:
What gave rise to the group? Boko Haram has roots in the 1970s-era Islamic revival in the region, but was founded in 2002 by a Muslim cleric named Mohammed Yusuf, shortly after Nigeria's transition from dictatorship to democracy in 1999. The Boko Haram ideology—disseminated through a mosque and Islamic school Yusuf set up—gained traction in post-dictatorship Nigeria because many northern Muslims saw Western-style democracy as a scheme to disenfranchise them; voter turnout is higher in the Christian south than in the Muslim north. Persistent extreme poverty in the region has reinforced the notion that the government, which the group believes has been corrupted by Western values, cares more about enriching itself than helping Nigerians, and it has helped drive Boko Haram recruitment over the years. It's hard to say how many Nigerians the group counts as members, but the Nigerian security forces claim to have killed thousands of them.
Nigerians have labeled the group Boko Haram, which loosely translated means "Western education is a sin." But that's not what Boko Haram calls itself. Its official name is Jama'atu Ahlis Sunna Lidda'awati wal-Jihad, which in Arabic means "People Committed to the Propagation of the Prophet's Teachings and Jihad."
Boko Haram is an Islamist terror group. Any links with Al Qaeda? Yep. In many of his sermons, Boko Haram leader Abubakar Shekau pledges allegiance to Al Qaeda. And Boko Haram has reportedly adopted many of Al Qaeda's terrorist tactics, including suicide bombings. Last year, the Obama administration officially designated Boko Haram a terrorist organization.
Has the group ever attacked Americans? No. But Boko Haram has threatened to attack the United States, which it calls "a prostitute nation of infidels and liars." And the group has kidnapped Westerners before.
Why did the militants kidnap the schoolgirls? In an effort to scare Nigerians away from Western education, Boko Haram and other militants have attacked 50 schools over the past year, killing more than 100 schoolchildren and 70 teachers. Thousands of students and teachers across the northern part of the country have been forced to flee their schools because of the violence.
This is not the first time Boko Haram has kidnapped girls, either. Just two weeks before the Chibok abduction, 25 young girls were kidnapped by the Islamist militants from the northern town of Konduga. Those girls are likely still being held captive. And Boko Haram abducted handfuls of children last year, as well as Christian women, whom the group converts to Islam and forces into marriage. But the Chibok kidnapping "is the largest number of children abducted in one swoop in the country," Nnamdi Obasi, a senior Nigeria analyst for the International Crisis Group, told Mother Jones this week.
How did the Chibok attack play out? Here is Michelle Faul, of the Associated Press, who interviewed one of the girls who was able to escape:
She says that when the gunmen came to her dormitory, they were sleeping. This is before dawn. These men came in, they had uniforms. They said, "Don't worry. We're soldiers here to help you." And she said it wasn't until that they were outside and…started setting fire to the school and shouting…"God is great," that it suddenly dawned on them these were not soldiers. These were Boko Haram.
You can imagine the conditions that they're in [now]. They were taken initially to the Sambisa forest, dense forests, humid heat, blocks of malaria-carrying mosquitoes. They're probably drinking water from rivers and streams that [are] not clean. We're told they're kept on the move. Every couple of days, they're moving.
Have any of the girls escaped? Nigerian police report that 53 of the girls have escaped, but 276 remain missing. Here is the AP's Faul again, explaining how some of the girls managed to flee the terrorists:
The girl I spoke with was able to escape on the first night. She said that they were loaded onto trucks. It was dark. In the dark, some of the girls clung to low-hanging branches overhead. This was an open-back truck. She said she hesitated. And then one of the girls said, "Me, I'm going. If they shoot me, they shoot me, but I don't know what else they might do to me if I don't go." So this girl jumped down, and the girl I spoke to jumped down. She said she ran into the bush, and she said, "I ran and I ran." And she said, "That's how I was able to save myself."
What is the Nigerian government doing to rescue the girls? The Nigerian government claims that it has deployed aerial surveillance over the forest and that it has soldiers on foot searching for the girls. But from the start, Nigerian security forces made a pretty weak effort to find the girls, Mausi Segun, a researcher for Human Rights Watch based in northern Nigeria, told Mother Jones last week. She says the military did not make use of information provided by parents and locals in its rescue efforts. Desperate parents took to the forest themselves to search for their daughters.
Meanwhile, Nigerian President Goodluck Jonathan waited three weeks before publicly acknowledging the abductions and admitting he had no idea where the girls might be. The tepid response by the government has sparked a string of protests in Abuja. (First lady Patience Jonathan recently alleged that women protesting in Abuja against the government's weak response to the Chibok abductions had fabricated the kidnappings.)
What is the rest of the world doing to help rescue the kidnapped girls? On Tuesday, the Nigerian government accepted a US offer to send a team of military and law enforcement officials to help the search and rescue effort. The United Kingdom will send a similar team. China and France have pledged assistance, too.
In the wake of the kidnapping, the rest of the world was slow on the uptake. Only after Nigerians criticized the international media's initial indifference to the massive kidnapping did the foreign press start covering the attack. Since then, global outrage has grown by the day. The Twitter hashtag #BringBackOurGirls has been tweeted more than a million times. On Wednesday, First Lady Michelle Obama tweeted her support.May 7, 2014
How is the Nigerian government fighting the broader Boko Haram insurgency? Jonathan has vowed to defeat Boko Haram, but the insurgency is deadlier now than at any point in the group's history. In the the first few months of 2014, the Islamist militants have already killed 1,500 people.
As Mother Jones reported last week, one reason the Nigerian government has not been able to stem attacks by the group is that the military does not coordinate with security forces in the countries that border northern Nigeria—including Cameroon, Chad, and Niger—where Boko Haram hides out. And the military's expenditures are not tracked, so it's hard to tell how much of the $6 billion a year the country spends on defense actually goes toward fighting Boko Haram.
Human rights advocates charge that Nigerian security forces' response to the insurgency, which often includes the indiscriminate killing of northern Nigerian men, has aggravated Boko Haram violence.
The United States provides about $1 million a year in aid to the Nigerian military, as well as $3 million in law enforcement assistance. And the US military will soon start training Nigerian special forces to fight Boko Haram.
Update, Thursday, May 8, 2014: Boko Haram killed more than 300 people in an attack on a northern town of Gamboru Ngala this week, the New York Times reported Wednesday night. There were no security forces in the town because they had all been drafted to search for the missing girls.
If this were a Hardy Boys book, it would be The Hardy Boys and the Mystery of the Porn Stars' Disappearing Bank Accounts.
Last month, porn star Teagan Presley told Vice that JPMorgan Chase & Co. closed her account because the bank considered her "high-risk." Then, on Wednesday, porn director David Lord told the Daily Beast that Chase sent him a letter notifying him that the bank was going to close his account on May 11. The Beast and Vice suggested that a secretive Justice Department program, "Operation Choke Point," was behind the account closures. But a Chase insider familiar with the matter says that the initiative has nothing to do with the termination of these accounts.
"This has nothing to do with Operation Choke Point," the source told Mother Jones. "There's not a targeted effort to exit consumers' accounts because of an affiliation with an industry [and] we have no policy that would prohibit a consumer from having a checking account because of an affiliation with this industry. We routinely exit consumers for a variety of reasons. For privacy reasons we can't get into why."
The porn stars' allegations play into a narrative—pushed by banks and congressional Republicans—that the Obama administration is overstretching its authority by forcing banks to police the free market. Here's the real story:
What is Operation Choke Point? Operation Choke Point is a federal initiative that aims to crack down on fraud by honing in on banks and payment processors—the companies that serve as middlemen between merchants and banks on credit card transactions. Financial institutions are not supposed to do business with companies they believe might be breaking the law. But Justice Department officials suspect that some payment processors ignore signs of fraud—like high percentages of transactions being rejected as unauthorized—in transactions they process, and banks go along for the ride, earning massive profits.
The Justice Department has already filed one lawsuit under the program. In January, the government sued Four Oaks Bank in North Carolina, charging that it "knew or was deliberately ignorant" that it was working with a company that processed payments for merchants who were breaking the law. According to the lawsuit, Four Oaks worked with a Texas-based payment processor that processed about $2.4 billion in transactions on behalf of fraudulent payday lenders, internet gambling entities, and a Ponzi fraud scheme. The processor then allegedly paid Four Oaks more than $850,000 in fees. (In April, Four Oaks reached a $1.2 million settlement with the government, but did not admit wrongdoing.)
President Obama's Financial Fraud Enforcement Task Force, headed by the Department of Justice, is behind the program. Michael Bresnick, who runs the task force, made the program public last March. He says that the aim is to "close the access to the banking system that mass marketing fraudsters enjoy—effectively putting a chokehold on it."
Is this the first time that feds have asked banks to keep an eye on their customers? No. The Bank Secrecy Act of 1970 requires financial institutions to assist the feds in preventing money laundering, which includes scrutinizing customers. However, banks argue that Operation Choke Point goes further than that law.
Does Operation Choke Point include a "blacklist" of businesses or individuals the government is requiring banks to target? Not exactly. Last September, the Federal Deposit Insurance Corporation issued updated regulatory guidelines noting that "facilitating payment processing for merchant customers engaged in higher-risk activities can pose risks to financial institutions." A footnote in the guidelines linked to a list of products and services, published in 2011, that the feds say have been associated with high-risk activity, including get-rich products, drug paraphernalia, escort services, firearm sales, pornography, and racist materials. But the September guidance makes clear that financial institutions that "properly manage these relationships and risks are neither prohibited nor discouraged from providing payment processing services to customers operating in compliance with applicable law." In other words, the guidance requires banks to perform due diligence to prevent fraud, but does not require banks to go on a porn-star witch hunt.
Why are some people saying Operation Choke Point discriminates against low-income Americans? As part of the program, the feds are scrutinizing payday lenders, which offer short-term loans at high interest rates. Critics of these lenders say they take advantage of low-income Americans, while defenders note that they're often the only option for Americans unable to get loans elsewhere. Some states restrict or ban payday loans. But as payday lenders move online, they've been able to skirt state rules, according to the Justice Department. The feds hope to crack down on payday lenders that are not complying with state and federal regulations. "This effort is focusing on ensuring that lenders are not using electronic payment networks to commit fraud or offer products that would not otherwise be permitted," says Tom Feltner, director of financial services at the Consumer Federation of America, a national association of nonprofit consumer advocacy groups.
Who opposes the program? Banks, payday lenders, gun owners, conservatives, and some Democrats have expressed opposition to the program. Frank Keating, president and CEO of the American Bankers Association, wrote an op-ed in the Wall Street Journal last month accusing the Justice Department of "forcing banks to make judgments about criminal behavior and then holding them accountable for the possible wrongdoing of others." Jason Oxman, chief executive of the Electronic Transaction Association, which recently released guidelines for payment processors, told the Washington Post that Operation Choke Point shouldn't target entire industries, and should instead focus on specific bad actors. A new lobbying group, the Third Party Payment Processors Association, opposes Operation Choke Point, and an activist group called "StopTheChoke.com" is running an online campaign against the program. The NRA, after receiving concerns from gun owners that the DOJ is using the program to take away their guns, said last week that "it will continue to monitor developments concerning Operation Choke Point."
On January 8, Reps. Darrell Issa (R-Calif.) and Jim Jordan (R-Ohio) sent a letter to the Justice Department arguing that "the extraordinary breadth of the Department's dragnet prompts concerns 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."
Who supports it? Quite a few Democrats support the program. On February 26, Sen. Jeff Merkley (D-Ore.) and Rep. Elijah Cummings (D-Md.) sent a letter to the Justice Department recommending that the program continue. The letter, cosigned by 11 other Democrats, including Sen. Elizabeth Warren (D-Mass.), said: "The Department plays a critical role in ensuring system-wide compliance with anti-fraud, anti-money-laundering, and related laws, especially as they apply to the unique risks associated with our payments system, and we urge the Department to continue its vigorous oversight."
Diane Standaert, senior legislative counsel for the Center for Responsible Lending, notes that eradicating fraud is also a win for consumers. "Banks should have a vested interest in making sure their own customers accounts aren't being abused or unnecessarily drained," she says. "By complying with this existing guidance, it's a win-win."