A Wisconsin gun shop owner successfully opened an account at hiscredit union, the $272 million Heritage Credit Union in Madison,Wis., only to find out a week later that he had to close it inperson at a local branch.
|When Mike Schuetz, owner of Hawkins Guns LLC in Hawkins, Wis.,asked the branch manager for an explanation, he was told the creditunion had received pressure from regulators. He recorded hisconversation with the manager, who also explained the credit uniondid not serve businesses associated with guns and ammunition.
|Schuetz is convinced the situation occurred as a result ofOperation Choke Point, which the U.S. Department of Justiceestablished to reduce fraud and reputational risk to financialinstitutions by pressuring them to refuse business from riskysectors.
|“They told me I had to close it because I was a high-riskindustry and they were not able to service me,” Schuetz told CUTimes. “The local manager had a clip board from which she readoff of with certain industries listed.”
Do you think NCUA examiners are pressingcredit unions to follow Operation Choke Point accountstandards?|
Schuetz, who is also a private investigator, claimed that thedocument mirrored a list of high-risk merchants put out by theFDIC, which included payday lenders and gun dealers. The FDIC laterremoved the list from its website and said it wasmisinterpreted.
|“The document named all of the same industries in OperationChoke Point, so if it walks like a duck and looks like a duck, it'susually a duck,” he said. “It's not about high cash flow becausethere are other industries on that list that are depositing muchmore money than I could ever dream about depositing.”
|Schuetz' business is located in the Wisconsin districtrepresented by Rep. Sean Duffy (R-Wis.), chairman of the HouseFinancial Services Oversight and Investigations subcommittee.Schuetz said he brought the issue to Duffy's attention when thecredit union closed his account.
|“I went there to hold him accountable,” he said. “I don't wantour elected officials blowing smoke. I want to make sure they aredoing what they are elected to do, and so far I'm happy with howCongressman Duffy is dealing with this issue. He's taking itseriously.”
|Schuetz received publicity in conservative media outlets inMarch when he traveled to Wash., D.C. to attend a subcommitteehearing, where FDIC Chairman Martin Gruenberg testified about theagency's role in Operation Choke Point.
|Cassie Smedile, Duffy's communications director, said thecongressman has spoken with Schuetz on several occasions, but thatSchuetz decided to attend the hearing on his own.
|Anita Rauch, president/CEO of Heritage Credit Union, refutedclaims that the credit union closed Schuetz' account due topressure from regulators or Operation Choke Point.
|“It's not that we are getting pressure from the regulator,”Rauch said. “We are required to operate under the Bank Secrecy Actregulation, and back in August, we discovered that our monitoringsystem needed to be kicked up a notch. We have grown $100 millionin three years, and at our size, the amount of monitoring for cashintense businesses – the expectation is a little bit higher. Webegan working on accommodating cash intense businesses no matterwhat the type of business. It wasn't strictly directed at guns orgun shop owners.”
|Rauch noted that many of Heritage Credit Union's employees huntand own guns.
|“For us, that's not what it's about,” she said. “It's aboutcomplying with the regulations. At the end of the day, if there's aproblem at all, it's with the regulation itself.”
||In response, Schuetz said the credit union is currentlyservicing a business in his community that deposits up to $15,000per day depending on the time of year.
|“When I have two recordings from two different managers, it kindof tells the tale,” he said.
|Rauch was asked if her credit union has ever closed a member'saccount due to requirements from regulators or as a result ofOperation Choke Point, to which she replied, “No, we have not.”
|In one of Schuetz' recordings, a regional manager attributed theclosure of his account to NCUA examiners.
|“They came in, looked at our books, looked at everything andsaid, 'Here's some accounts we feel like we're going to regulateyou on,' and they kind of put the screws to us on what we could andcouldn't do type thing,” the manager stated in the recording.“We're not anti-gun as a company but our hands are tied.”
|According to NCUA Public Affairs Specialist John Fairbanks, theNCUA is not involved in Operation Choke Point.
|Rauch explained the credit union made a mistake and was notprepared to handle Schuetz' account.
|“We should not have opened the account for Hawkins Guns becausewe knew we couldn't monitor any cash intense businesses,” she said.“It was quickly closed because it showed up on our audit report. Atthat time we were manually monitoring.”
|Schuetz said the credit union's response has put his business ina negative light.
|“Is she [Rauch] getting pressured to not admit that it'sOperation Choke Point?” he asked. “I don't know. Would it appear tobe that? Sure, it might appear to be that. I would just appreciateit if they would say, 'We have no comment because we would like torespect the privacy of our customers' rather than telling the wholecommunity I'm a high cash intensive business that a $270 millioncredit union cannot process, therefore putting a target on myback.”
|Rauch said her credit union purchased the necessary monitoringsoftware to serve members like Schuetz in September 2014.
|“Our position all along has been our inability to serve Mike atHawkins Guns was simply a temporary situation,” she said. “It's notreasonable to think you can buy the software, plug it in and itjust works. It takes a little bit of programming.”
|In November 2014, Rauch said Heritage Credit Union informedSchuetz the credit union could open his account in February2015.
|“I respect his decision not to open an account with us,” shesaid. “I think he is probably not happy with the situation as itcame about.”
|Schuetz said the credit union's explanation of the situation hasdiscouraged him from re-opening the account.
|“They are not standing behind me as a customer,” he said. “It'snot a place I would like to go back to. I don't feel welcome.”
|Schuetz explained he is not trying to make the situation abouthimself or the credit union.
|“I'm trying to bring attention to it for the American people sothey can see what our government is doing and the avenues they aretrying to infringe upon us,” he said.
Complete your profile to continue reading and get FREE access to CUTimes.com, part of your ALM digital membership.
Your access to unlimited CUTimes.com content isn’t changing.
Once you are an ALM digital member, you’ll receive:
- Critical CUTimes.com information including comprehensive product and service provider listings via the Marketplace Directory, CU Careers, resources from industry leaders, webcasts, and breaking news, analysis and more with our informative Newsletters.
- Exclusive discounts on ALM and CU Times events.
- Access to other award-winning ALM websites including Law.com and GlobeSt.com.
Already have an account? Sign In
© 2024 ALM Global, LLC, All Rights Reserved. Request academic re-use from www.copyright.com. All other uses, submit a request to [email protected]. For more information visit Asset & Logo Licensing.
