It’s been a decade since most Americans heard about “Operation Choke Point,” the Barack Obama administration’s effort to target politically disfavored businesses and their customers by forcing banks to close their accounts.

Yet, the dangerous legacy of this controversial policy has lingered because of secrecy laws that effectively prevent banks from telling their customers why they were “de-banked” and incredibly cumbersome bank examination rules that rival the worst audit procedures the IRS could dream of foisting on taxpayers.

Lawmakers must act on a long-overdue course correction.

The Obama administration initially used Operation Choke Point to go after firearms manufacturers and other groups, but today, the threat of Operation Choke Point 2.0 remains real, leveraging the government’s regulatory power to change how banks operate and disincentivize legal activities for political purposes.

Congress has a role to play in this dynamic. The Bank Secrecy Act forces banks to monitor customers’ activity and submit Suspicious Activity Reports on transactions above $10,000 to the Treasury Department’s Financial Crimes Enforcement Network. Only a tiny percentage of these reports flag illegal activity; however, many still end up leading to account closures.

This was the concern that the National Taxpayers Union and other opponents had about the Treasury’s attempts during the Biden administration to expand data collection on tens of millions of bank accounts for tax monitoring purposes. Besides being an administrative nightmare for banks and their customers, unbanked Americans would be rightfully wary of setting up an account.

While this scheme was thankfully shelved, federal regulators still wield their existing powers to pressure banks to label accounts as “high risk,” which carries punitive compliance costs and essentially forces account closures. Ultimately, these actions cut off targeted groups from banking services and put up barriers to the financial system, allowing the government to kneecap any company, organization or industry it wishes.

This reflects a much broader issue with today’s banking regulators. The examination process to ensure that banks effectively manage material risks has strayed far from that original mission. Bank examiners number in the thousands between the different regulatory agencies and issue mandates that cannot be challenged by banks due to the penalties for noncompliance.

These mandates extend beyond material risk to shape financial institutions’ management decisions broadly. These examinations have an uncanny resemblance to the worst IRS audits — endless information requests that disrupt the daily course of business, arbitrary procedures and contradictory decisions that the investigated entity has difficulty appealing to a neutral party.

This broken examination process allows regulators to lean on banks to file more Suspicious Activity Reports, label more accounts as “high risk,” and move away from offering services to industries like cryptocurrency. Fixes are needed urgently to clarify and streamline rules. Doing so will save taxpayer dollars that flow to regulators with little transparency. It will also ease billions in needless compliance overhead costs that banks must shoulder and pass along to customers.

Congress passed the Anti-Money Laundering Act of 2020 to ensure banks can focus their efforts specifically on detecting illegal financial activity rather than the broad swath of legal activity regulators force them to flag. The Treasury can and should implement this law as it was intended. This change would help prevent many future unwarranted cases of debanking.

The bank examination process also needs significant reforms. Lawmakers must rein in the power of examiners to dictate which legal activities banks can and can’t pursue. They must also take steps to prevent regulators from targeting law-abiding businesses or individuals for political reasons. As lawmakers begin to hold serious discussions on the effects of debanking in America, these solutions must be front and center.

Unless a sensible balance is established over banking regulation and other financial services policies, the threat of politicized debanking and unnecessary costs to consumers and taxpayers will continue to loom over the entire economy. With the right reforms, we can close the Operation Choke Point playbook for good.

Pete Sepp is the president of the National Taxpayers Union. He wrote this for InsideSources.com.