Just before Donald Trump’s term as president expired, his acting director of the Office of the Comptroller of the Currency tried to implement a new regulation that would have prevented large financial institutions from denying services to industries targeted by activists, including the firearms industry. One of Joe Biden’s first moves as president was to suspend that rule, but the idea is now taking off at the state level.
The legislation, Senate Bill 19, would block government entities from contracting with banks and other financial services providers that have policies that restrict business with the firearms industry. Under the bill, companies with 10 employees or more seeking a government contract worth at least $100,000 would have to verify in writing that they do not have a policy or directive that “discriminates” against the firearms or ammunition industries.
It’s targeted at large banks and financial institutions that have attempted to “use financial pressure to infringe upon our Second Amendment rights,” according to a statement from the sponsors in an analysis of the bill.
As you can imagine, big banks are fuming over the legislation, though there’s an easy way for them to continue doing business with local governments in the Lone Star State: stop discriminating against the firearms industry.
If the Senate version is enacted, the law could hurt the banks’ municipal underwriting businesses in Texas, a huge market for state and local debt deals. Texas-based borrowers sold more than $58 billion of bonds in 2020, the second-most of any state behind California, according to data compiled by Bloomberg. As part of bond offerings, borrowers often hire banks ahead of time and pay them a fee for underwriting the sales.
Elizabeth Reich, chief financial officer of the city of Dallas, said the bill could have wide-ranging impacts on the city, including limiting competition for its debt sales. The bill could also affect banking relationships: Dallas had $257 million in deposits with Bank of America at the end of February, she said.
“If I’m limited in who I can do business with and talk to and engage with, that’s going to raise my costs and increase the cost to the taxpayers,” she said.
Just like the companies within the firearms industry who are limited in who they can do business with, which in turn can raise their costs and increase the cost to consumers. Of course all that could be avoided if the banks stick to providing financial services to all lawful businesses that have their fiscal house in order. Instead, many of these enormous banks have decided to take a stand against the Second Amendment rights of their customers, and they shouldn’t be shocked to see states like Texas push back.
There’s only a month left in the Texas legislative session, but the bill has already cleared the Senate and is currently in the House. It also has the backing of Lt. Gov. Dan Patrick, which may help it get through a crowded committee calendar and onto the floor for a full vote. I’d love to not only see SB 19 become law in the Lone Star State, but other states pick up the idea and run with it as well. The more states put this kind of pressure on the big banks, the more likely it is that they’ll give up their anti-gun policies in favor of a more neutral position.