While the new Constitutional Carry law in Texas has received a lot of attention from the national media this week (almost all of it negative, of course), another piece of legislation signed by Gov. Greg Abbott has quietly taken effect, and its implementation could have a big impact on the bottom line of some of the largest financial institutions in the country.
For several years now, we’ve seen big banks impose restrictions on their relationships with companies in the firearms industry; refusing to do business with firms that manufacture modern sporting rifles or “large capacity” magazines, for instance. Well, now these same banks are getting a taste of their own medicine, because unless they end their corporate gun control policies they won’t be allowed to underwrite municipal or state bonds.
Some of the country’s largest banks, including Bank of America, Citibank, and JPMorgan Chase underwrite municipal and state debt in Texas, but also have tailored restrictions that appear to bar financing to certain parts of the gun industry, such as companies that make or sell bump stocks or sell to customers under 21.
Republican Attorney General Ken Paxton’s office isn’t having it.
Leslie Brock, the state’s assistant attorney general and chief of the Public Finance Division, notified bond underwriters that compliance with the new Texas law isn’t open to “qualifications,” according to an Aug. 23 letter obtained by Bloomberg Law.
The new law, signed by Republican Gov. Greg Abbott in June, requires banks and other businesses seeking municipal or state contracts worth $100,000 or more to certify that they don’t exclude firearm or ammunition industries and retailers. Companies that do business with the state, including bond underwriters, face a Sept. 1 deadline to certify compliance with the law.
Banks that reject clients “based on the types of weapons sold or customers served” wouldn’t be in compliance, according to Brock’s letter. Such restrictions amount to “a refusal to do business against an entire class of firearm entities,” she wrote.
Texas is the second largest bond market in the country behind California, so this isn’t a minor measure that banks can simply shrug off. In fact, there are signs that some of these institutions may be trying to get around the new law without actually changing their practices.
“While we believe our business practices should permit us to certify, we continue to assess our next steps as we try to understand how Texas will interpret the law,” JPMorgan spokesperson Patricia Wexler told Bloomberg Law Aug. 24.
JPMorgan Chase CEO Jamie Dimon told the House Financial Services Committee May 27 that the bank doesn’t serve manufacturers of assault-style weapons for civilian use, but does serve manufacturers for military and law enforcement.
Bank of America declined to comment. However, the bank previously said in 2018 it would stop making loans to companies making military-style rifles for civilian use after more than 150 employees were affected by mass shootings in the preceding years.
Citibank also declined to comment, but referred Bloomberg Law to a June 23 blog post that said the bank will keep doing business in Texas. Citibank said the law doesn’t conflict with a policy adopted in 2018 requiring retail firearms industry clients to use “best practices” like requiring background checks, prohibiting sales to people under 21, and barring sales of bump stocks or high-capacity magazines.
Ultimately it’s not up to Citibank to determine whether or not it’s in compliance with the new law. That will be up to Texas AG Ken Paxton, and my guess is that if Citibank is refusing to do business with companies that abide by all federal, state, and local laws but don’t comply with the bank’s supposed “best practices,” Paxton’s office will have something to say about it.
Will the new law lead to an actual reversal of the banks’ anti-gun policies? Maybe, though I wouldn’t be surprised if Paxton’s office has to take a hard line before any corporation like Citibank or JP Morgan Chase changes their stance. If other population-rich red states like Florida and Ohio were to follow Texas’ lead, however, that would certainly increase the odds of these anti-gun financial institutions scrapping their gun control mandates in favor of a politically-neutral policy. If gun owners really want to bring these banks to heel, they should be encouraging their own state legislators to follow Texas’ lead here.