Payday lenders are seeking an emergency injunction in the U.S. District Court for the District of Columbia against federal banking regulators including the FDIC, the Federal Reserve and the OCC, after what the payday lenders characterized as an increase in efforts on the part of the regulators to shut the payday lenders out of banking services. In particular, the payday lenders alleged that the regulators have stepped up pressure on U.S. banks to cease offering services as part of “Operation Choke Point.”
Such increased pressure has resulted in several large banks unceremoniously closing accounts held by payday lenders on short notice based on a fear that failing to do so would open the banks up to penalties from the regulators or increased scrutiny during examinations.
According to the payday lenders, the recent increase in pressure on the part of regulators has made an already problematic situation even worse, as it now threatens the payday lenders’ continued viability. For this reason, the payday lenders believe an emergency injunction is necessary to avoid irreparable harm.