'Choke Point 2.0': Bank regulators cut porn industry off from banks, states pass age limits to porn

As Republicans lead state efforts to prevent minors from accessing pornography, the porn industry is fighting a renewed legal battle against the federal government after the Biden administration halted a rule ensuring "fair access to banking services."

The battle is starting what critics call "Operation Choke Point 2.0," using its authority over the banking sector.

More than half a dozen Republican-majority states are changing -- some say strangling -- the multibillion-dollar porn industry by passing legislation supported by Democrats that forces people to submit a government-issued ID to prove they are 18 or older before accessing adult video content online. 

Meanwhile, the pornography industry is also under regulatory fire from the Biden administration, which is putting its banking and cryptocurrency access at risk. One of the first acts that the Office of the Comptroller of the Currency did under President Joe Biden was put a hold on a Trump-era rule that would have ensured fair access to banking services from going into effect. The rule would have prohibited major financial institutions from arbitrarily discriminating against businesses.

This rule was designed to prevent the resumption of Operation Choke Point, which began under the Obama administration. The program investigated the business that banks did with companies operating legal, but politically unpopular industries disfavored by the administration, such as firearms dealers, payday lenders, pawn shops and people involved in the adult film industry.

Hundreds of current and former adult film actors in 2014 said Chase Bank closed down their accounts or denied them services due to their profession. Many of the stars at the time blamed the Obama Justice Department and Operation Choke Point for pushing the banks to close down their accounts.

More recently, in August 2022, multiple current and former adult entertainers said Wells Fargo Bank terminated their accounts, citing efforts to "manage risks in its banking operations," according to Rolling Stone.

At the time critics said the program was unconstitutional as it denied the actors and studios their due process rights under the Fourteenth Amendment, which states that government actors must follow certain procedures before they may deprive a person of a protected life, liberty, or property interest.

The D.C.-based law firm Cooper & Kirk, which successfully challenged the original Operation Choke Point, called the Biden administration's latest efforts "Operation Choke Point 2.0," in a report earlier this year. The focus of the new operation is on regulating the cryptocurrency industry, the attorneys said.

The firm explained Operation Choke Point as based on regulators managing an undefined term called "reputation risk." The firm cited a March 2014 letter from then-Rep. Jeb Hensarling (R-Texas) to then-Federal Reserve Chair Janet Yellen, in which he said the term could "be invoked to compel a depository institution to sever a customer relationship with a small business operating in accordance with all applicable laws and regulations but whose industry is deemed 'reputationally risky' for no other reason than that it has been the subject of unflattering press coverage, or that certain Executive Branch agencies disapprove of its business model."

The report went on to refer to it as a "covert campaign of coercion, threats, and backroom pressure carried out by agency examiners and officials." 

The Free Speech Coalition, a group that represents the interests of people and companies in the adult film industry, released a report in May based on a survey of more than 600 adult industry members. Nearly two-thirds of respondents, 63%, said they had "lost a bank or financial tool due to their work," while 36% of adult businesses had lost a bank account within the past year, per the survey.

Mike Stabile, a spokesperson for the coalition, told Just the News that while laws regulating minors' access to pornography are being implemented mostly in "fairly conservative" states, when he's spoken to members of Congress over the past year, the banking access issue is treated differently.

"In some ways, the right in that instance is actually, you know, as concerned or possibly more concerned about banking fairness than the left," Stabile said. He also pointed out how Sen. Kevin Cramer (R-N.D.) introduced the "Fair Access to Banking Act" earlier this year with 36 GOP co-sponsors.

The text of that bill states: "The term 'fair access to financial services' means persons engaged in activities lawful under Federal law are able to obtain financial services at banks without impediments caused by a prejudice against or dislike for a person or the business of the customer, products or services sold by the person, or favoritism for market alternatives to the business of the person." The bill is currently awaiting review with the Senate Committee on Banking, Housing, and Urban Affairs.

Some lawmakers who are morally opposed to adult content "get it immediately" when he talks to them about the importance of banking access in legal businesses, Stabile said. "I think that in that case, it's not a bipartisan issue."

When talking about the issue with progressive Democrats, Stabile said, "We often talk about sort of marginalized communities and the ways in which lack of access to banking encourages, or fuels exploitation."

The coalition's website argues that without access to banking, legal adult industry workers "must hand over financial control to someone who could exploit them," and banking access "helps prevent trafficking" and helps law enforcement by creating a trail of financial evidence when trafficking crimes are committed.

"I think that it is paradoxically an issue that can bring the right and left together, even though it's a tremendously complicated and sometimes controversial community," Stabile said. "Both sides seem to see the issue with banks controlling, you know, who can speak and who can survive in a digital world."

Marc Randazza, a First Amendment attorney with nearly 20 years of experience representing adult entertainment companies, told Just the News that the use of banks to restrict access to banking services is hurting an already struggling industry.

"Many companies are already on their last legs. Between piracy and the fact that it is so much better to just move out of the USA, the industry is limping along," Randazza told Just the News.

He said the adult film industry "is always a political football. When you wanna beat up on someone, you beat up on porn -- nobody wants to publicly defend it."

At the same time, it's a football a lot of people want to throw around. Data suggests porn industry revenue in 2022 jumped after the pandemic to $13 billion in the United States alone, according to research earlier this year from Bedbible, a sex toy review website that also conducts and publishes industry research.

To put those numbers in perspective, the study notes that the NFL generated only $17.19 billion in 2021, and Netflix generated revenue of $29.7 billion that same year. 

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