Jan 27 The U.S. justice department is exploring
civil and criminal actions against more than 50 big and small
banks that conduct business with payday lenders, who are being
increasingly scrutinized by regulators, the New York Times
reported, citing government officials.
Under a new program, "Operation Choke Point," the department
is checking banks over whether they enabled payday lenders to
illegally siphon billions of dollars from U.S. consumers'
checking accounts, the newspaper said, citing state and federal
officials briefed on the investigation.
In the first action under the program, federal prosecutors
have already brought a lawsuit against Four Oaks Bank for being
"deliberately ignorant" about processing payments on behalf of
merchants, the report said.
About $2.4 billion was illegally withdrawn from checking
accounts of U.S. customers by companies enabled by Four Oaks
Bank, the New York Times said. ()
The bank later negotiated a civil settlement of about $1.2
million with federal prosecutors.
However, a federal crackdown on banks remain tough as their
role in siphoning off money is largely in the background with
banking services being provided to third-party payment
processors, who manage payments for their trading customers, the
The move has attracted criticism from congressional
lawmakers, who accused the Department of Justice of trying to
covertly quash the payday lending industry, according to the
The Department of Justice could not be immediately reached
for comments outside of regular U.S. business hours.