Four years ago, JPMorgan Chase joined some of the country’s largest banks openly away from the firearms industry after 17 people were killed in a shooting in Parkland, Florida.
The relationship between JP Morgan and the cancer maker has been “significantly reduced and severely restricted,” Marianne Lake, then chief financial officer of the bank, told reporters. “We have strong risk management practices and policies associated with this,” she said.
The bank, along with Citigroup and other Wall Street companies, did not completely close the door to the firearms company.
In a letter sent to the Texas Attorney General this month, JP Morgan, the country’s largest bank, expressed its willingness to continue working with the firearms industry. The letter described the bank’s “long-standing business relationship” with industry in the state and said, “We look forward to continuing such a relationship in the future.”
The letter, sent by a bank lawyer from Foley & Lardner on May 13, responded to a new Texas law prohibiting state agencies from working with companies that “discriminate” against businesses and individuals. industry. Under one provision of the law, banks and other professional services companies are required to submit a document confirming their compliance with the law.
The bank’s policy has declared that it “does not discriminate or prevent” transactions with firearms entities or firearms industry groups solely on the basis of their status as a firearms entity or firearms industry group.
“These commercial relationships are important and valuable,” added JP Morgan. Since early 2020, banks have led the financing of transactions that have raised $ 708 million to companies in the gun industry, according to Dealogic data.
Citigroup, Restricted certain types of sales Manufacturers of firearms and ammunition with post-Parkland credit and debit card systems filed a similar letter to the Texas Attorney General in October. In it, Citi said, “We did not have any practices, policies, guidance, or directives that discriminate against firearms entities or firearms industry groups.”
It’s a big bet for big banks. If a bank states that it is in compliance with the law and it turns out that it is not, you may face criminal charges. It could also be locked out of the state’s huge municipal bond market. Texas is one of the country’s largest bond issuers, and Wall Street has long made local bond underwriting fees profitable and relatively risk-free. Texas has $ 50 billion in annual debt, according to Bloomberg data, and last year alone incurred $ 315 million in fees for financial companies.
Between 2015 and 2020, JP Morgan undertook 138 Texas bond transactions, raised $ 19 billion for the state and generated nearly $ 80 million in fees for banks, according to Bloomberg data. rice field. But since the law came into force in September, banks have been locked out of working for the state. This month, JP Morgan submitted a bid to undertake a $ 3.4 billion bond issuance for the state’s largest utility in history. The contract cannot be secured until it is certified under a new law known as SB 19.
From Opinion: Texas School Shooting
A commentary from the Times Opinion on the massacre at an elementary school in Uvalde, Texas.
- Michelle Goldberg: When we agree with yet another tragedy, the most common feelings are Nothing changes..
- Former Times Opinion Columnist Nicholas Kristof: Gun policies are complex and politically awkward, and not everyone is safe.But that’s Can reduce gun deaths..
- Roxane Gay: For all our cultural attachment to politeness, Nothing is less civilized Rather than political groups accepting the homeostasis of mass shootings.
- Jay Caspian Kang: By sharing each new tragedy and meme Created a museum of unbearable sadnessThe names and photos of the deceased are becoming more and more crowded.
Laws like SB19 make it difficult to take a stance, such as discussions on gun control and abortion, as large corporations are working on how to respond to national tragedy and looming social problems. As a result, companies are tug of war nationwide. Companies are trying to appease a large, loud employee base and advocacy group without alienating customers and supporters on the other side of the political spectrum. Regulations that can undermine their profits.
last year, Delta Air Lines and Coca-Cola faced fierce backlash From a Republican member of Georgia, where both companies are headquartered. Both companies opposed new state laws that would make it difficult for people to vote. Lyft has been targeted by Texas authorities After saying that it would help employees seek abortion care in other states in response to the restrictive new legislation passed there.
Gun control demands increased after an 18-year-old boy struck an elementary school in Uvalde, Texas last week. This was one of the deadliest school shootings in the United States on record.
Unlike after the shooting in Parkland, this time the leaders of the country’s largest companies, including major banks, remain largely silent.
Paul A. Argenty, a business professor studying public relations and ethics at Dartmouth College’s Tuck Business School, said: “It has a part of shareholder governance, but if you’re a CEO like Jamie Dimon of JP Morgan, you’re making better decisions for our interests and society in the long run. Will not be sued .. “
Banks say they haven’t changed their stance since Parkland.
A Citi spokesman said the bank has not changed its policies related to the gun industry since it came into force in March 2018. A spokeswoman for JP Morgan said: Civil style weapon. “
In a letter filed prior to the Uvalde attack, JPMorgan argued that clients are subject to stricter due diligence requirements because they consider the firearms industry to be “high risk.”
Texas law is the first law of its kind in the country. A similar law, described by the gun industry lobbyist as the FIND law, or the indiscriminate law of the firearms industry, has passed at least 10 state capitols, including Oklahoma and West Virginia, and the Giftds Law Center to According to PreventGunViolence. This year, Wyoming passed a law allowing firearms companies to sue banks and other companies that refuse to do business with them.
However, some states do not seem ready to pass this type of gun control. In March, a bill requiring Arizona firearms companies to provide banking services was stalled by Republican lawmakers, saying the government shouldn’t tell banks where to lend. In Louisiana, a law similar to SB 19 was passed by both the State Capitol and the Senate in 2021, but was rejected by Democratic Governor John Bel Edwards.
Mark Oliver, a spokesman for the National Shooting Sports Foundation, an industry group, said the FIND Act was needed as firearms companies were increasingly denied service from the country’s largest banks over the past few years. .. This group has helped push similar laws out of Texas.
“We have access to the banking industry and access to capital simply because we manufacture firearms that are legitimate products and the right to own them is protected by Article 2 of the Constitutional Amendment. We have submitted to Congress evidence from member companies that they have been rejected, “said Oliver.
He claimed that Citigroup had already violated Texas law. “Citigroup said it was state accredited and not discriminatory, but when you visit the website you can see on the website a policy of not dealing with the firearms industry,” Oliva said. increase.
In response to the group’s allegations, the Texas Attorney General has begun investigating Citi’s practices. The bank responded to this inquiry and said it believed it was in compliance with the law.
The Attorney General and the Governor’s representative did not respond to the message asking for comment.
Dru Stevenson, a professor at the South Texas Law University in Houston who studied SB 19, called Texas and other FIND laws bad public policy. He said the law was most likely to increase the spread of guns and could increase the cost of borrowing in cities, utilities and other government agencies. He also suggested that the law could have the effect of diverting more loans to gun stores and the gun industry in general as banks sought to maintain compliance. JP Morgan also expressed concern about the “overly broad or result-driven interpretation” of the law.
“Banks, unlike other small business loans, have to think twice about refusing to lend to gun stores, as the law enforces justification for why they refused it. “Stevenson said.