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Scholarship Highlight: Operation Choke Point and Gun-Industry Lending Laws; Carceral Reform for Gun Crimes

By on December 19, 2022 Categories: , ,

Today’s post highlights two new pieces of firearms-related scholarship.  First, in an upcoming article in the Administrative Law Review, Dru Stevenson critically examines the link between Operation Choke Point and gun-industry antiboycott laws.  Second, a forthcoming piece by Mugambi Jouet in the Arizona State Law Journal proposes avenues for possible bipartisan cooperation to address the carceral impact of gun crimes.  Professor Jouet presented an earlier version of his piece at the Center’s 2022 Firearms Law Works-in-Progress Workshop.

Each piece is summarized further and linked below.

Abstract:

Folklore about Operation Choke Point, a regulatory enforcement initiative in the second term of the Obama Administration, continues to come up as talking points among political conservatives when criticized regulatory agencies or attacking nominees for agency directorships. When several national banks announced in 2018 that they were backing away from the gun industry in various ways (in response to horrific mass shootings), the gun lobby reinvented Operation Choke Point as a conspiracy among bankers to defund gun dealers. This new, more fanciful narrative about Operation Choke Point has become the stated premise for new antiboycott laws that punish banks if they do not lend to the gun industry, such as Texas SB 19, enacted in 2021.

This essay is an attempt to set the record straight. Operation Choke Point was a benign initiative involving a small task force at the Department of Justice and officials from a variety of regulatory agencies that oversee the banking and consumer finance systems. Enforcement actions for consumer fraud targeted unscrupulous payday loan companies engaged in illegal activities, and exhortations from bank regulators reminded executives and compliance officers at financial institutions about their legal duties to screen business customers that presented elevated risks for fraud and money laundering. Backlash erupted when banking lobbyists and industry spokespersons claimed, with only anecdotal evidence, that banks were pressured to close accounts for bank customers who operated lawful businesses that were unpopular with Democrats. The gun industry also entered the fray, with vociferous but unsubstantiated claims that Operation Choke Point was a sinister conspiracy to defund (de-bank) firearm manufacturers and dealers, aimed at depriving the citizenry of the Second Amendment rights. Congressional hearings followed, along with investigations and reports by the Office of Inspector General and class action lawsuits against several regulatory agencies, which were dismissed or settled. The Office of Inspector General reports, however, were underwhelming compared to the alarmist rhetoric characterizing the public discourse on the subject. The federal agencies at the center of the firestorm – the DOJ and the FDIC – backpedaled on their regulatory guidance to financial institutions and wound down their enforcement activities, and whatever vestiges of Operation Choke Point remained officially ended when Trump took office. Yet the myths surrounding Operation Choke Point continue to have political salience and real-world adverse impact.

Abstract:

Gun violence in modern America persists in the face of irreconcilable views on gun control and the right to bear arms. Yet one area of agreement between Democrats and Republicans has received insufficient attention: punitiveness as a means of gun control. The United States has gravitated toward a peculiar social model combining extremely loose regulations on guns and extremely harsh penalties on gun crime. If someone possesses a gun illegally or carries one when committing another crime, such as burglary or drug dealing, draconian mandatory minimums can apply. These circumstances exemplify root causes of mass incarceration: overreliance on prisons in reaction to social problems and unforgiving punishments for those labeled as “violent” criminals. Contrary to widespread misconceptions, mass incarceration does not primarily stem from locking up petty, nonviolent offenders caught in the “War on Drugs.” Most prisoners are serving time for violent offenses. Steep sentence enhancements for crimes involving guns illustrate how American justice revolves around counterproductive, costly practices that disproportionately impact minorities.

This multidisciplinary Article envisions future reforms with the capacity to transcend America’s bitter polarization. A precondition to change is not for conservatives and liberals to wholeheartedly agree on issues like systemic racism or the right to bear arms. Rather, possibilities for penal reform are likelier when each side can come to the negotiating table for its own reasons. A paradigm shift in conservative America may prove especially indispensable, as Republicans tend to be more supportive of harsh punishments and Democrats are unlikely to achieve reform nationwide on party-line votes. This shift has already occurred to an extent given the rise of penal reform in red states. But both conservatives and liberals have failed to significantly reduce mass incarceration by recurrently excluding “violent” offenders from reform initiatives.

The Article explores how conservatives and liberals could gradually converge toward sentencing reform on gun crime. This could ultimately have a ripple effect on American sentencing norms, leading them closer to those of Western democracies with more effective and humane penal systems. Such bipartisanship is less elusive than it might seem. A rehabilitative approach toward gun crime fits with the evolution of American conservatism, which believes that guns should not be vilified since they are part of the nation’s identity. Similarly, the rehabilitation of people convicted of gun crime is consistent with cornerstones of modern American liberalism, namely stricter gun control and opposition to mass incarceration as an unjust, racist system. As opposite sides will probably retain much of their worldview even if their perspectives evolve to a degree, new ways of thinking could help bring reformers together. These social transformations cannot be predicted but should be theorized.

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