Bank Discontinuance

Pawnbrokers Continue to Experience Bank Discontinuance

January 31, 2019

Starting in early 2014, pawnbrokers across the country saw their checking and savings accounts and other bank services terminated with little to no explanation from their financial institutions. 

The NPA promptly began working tirelessly with its members, federal bank regulators, and Members of Congress to determine why banks were cutting off state-licensed pawnbrokers who had enjoyed many years of working relationships with the same banks.  

We were encouraged when the Department of Justice in August 2017 closed the “Operation Choke Point” initiative.  That action, along with the FDIC’s rescission of its so-called “high-risk list” (which never included pawnbrokers anyway), and their follow-up guidance to banks that proper risk management should be done on an individual case basis and not by banning entire categories of businesses, gave us hope that bank’s concerns about serving small businesses such as pawnbrokers would be reduced.  

Unfortunately, we are still receiving reports to the contrary.  Another prime example, without reason, was the recent large-scale cancellation of pawnbrokers’ business credit-card accounts.  Past and potential loss of banking privileges continues to cost pawnbrokers unnecessary anxiety, expense and extra work to secure new banking relationships. 

The NPA remains constant in its efforts to inform federal bank regulators that discontinuance is still happening and they should do more to prevent small Main Street businesses, including pawnbrokers, from losing banking relationships.