At first this was a matter of government policy, but now it is coming about by political pressure on private companies.In 2013, the Obama administration initiated Operation Choke Point, which utilized the banking industry to “choke off” the ability of certain “fraudulent” businesses in “high-risk” sectors to operate by cutting off their access to financial services. Many in the gun industry found themselves suddenly cut off from banking relationships without notice or explanation.
“This administration has very clearly told the banking industry which customers they feel represent ‘reputational risk’ to do business with,” said Peter Weinstock, a lawyer at Hunton & Williams LLP. “So financial institutions are reacting to this extraordinary enforcement arsenal by being ultra-conservative in who they do business with: Any companies that engage in any margin of risk as defined by this administration are being dropped.”
Gun makers labeled by the Obama administration as a “reputational risk” around the country found themselves being dumped by banks that they had worked with for decades. Companies were able to find substitutes but only at a much higher cost of doing business.