La. struggles with banks that restrict gun businesses
17th June 2019 · 0 Comments
By Susan Buchanan
Contributing Writer
Big banks have been pressured by stakeholders to do something about gun prevalence, private prisons and climate change, among other issues. Two major banks that decided to restrict gun business have upset Republican leaders in sportsman’s paradise. Because of their firearms policies, Louisiana last summer excluded Bank of America, Merrill Lynch and Citigroup from financing for roadwork and an interchange for the new Louis Armstrong Airport terminal.
Two other banks were chosen instead, including wayward Wells Fargo, which was being federally probed. This year, the state’s bond commissioners lightened up on BAML, however, and tapped it to provide financing for other work.
Over a year ago, BAML and Citi implemented gun policies after the February 2018 high school shooting that took 17 lives in Parkland, Florida.
When Citi announced its U.S. Commercial Firearms Policy in late March 2018, the bank said it wanted to help keep guns out of the wrong hands. Citi requires new clients not to sell firearms to anyone who hasn’t passed a background check or is under 21 years old, and not to sell bump stocks or high-capacity magazines. This policy applies to small businesses, commercial and institutional clients, and credit card partners. But “it doesn’t impact the ability of consumers to use their Citi cards at merchants of their choice,” the company said.
For its part, Bank of America said it wouldn’t finance the manufacturing of military-style firearms for civilian use, effective April 2018, but it would honor any related prior commitments. The bank said some of its employees and clients had been affected directly or indirectly by recent mass shootings.
Last August 16, Louisiana’s State Bond Commission barred Citibank and BAML from participating in roadwork financing because of their gun policies. In a 7-6 vote, split between Republicans and Democrats, the commission opted not to grade bids from the two banks. In the end, Wells Fargo and JP Morgan were chosen to be the senior underwriters.
That was Louisiana’s first Grant Anticipation Revenue Vehicle or GARVEE deal. Under the $600 million borrowing plan, the state is selling federal construction bonds to investors and repaying the debt over 12 years with highway money from Washington. The funds will be used for the I-10 Loyola Drive interchange for the new air terminal in Kenner, widening the I-10 in Baton Rouge, building an I-20 exit to Barksdale Air Force Base, and replacing the Belle Chasse bridge and tunnel in Plaquemines Parish.
In their choice of Wells Fargo, commissioners picked a bank being probed by the feds for auto insurance fraud, overcharging small businesses on credit card transactions, unfairly billing mortgage customers, and slamming college students with high fees.
When asked, Republican Representative Blake Miguez from Erath, who served as a proxy for the House on the bond commission in August, last week said he didn’t think Louisiana taxpayers had lost out because of the exclusion of Citi and BAML last summer.
In a shift this year, the bond commission altered its stance. BAML was awarded financing in February, Bank of America spokesman Bill Halldin said last week. In late February, BAML was the winning bidder as the commission sought $360 million for Louisiana general obligation bonds for construction. In the state’s first GO bond sale in nearly 18 months, commission members didn’t publicly object to firearm policies when bids were assessed. These bonds are being sold to investors for cash upfront, with debt to be paid over 20 years at a 3.2 percent interest rate.
Among the factors upsetting the bond commission in last August’s GARVEE bidding was that months after Citi and Bank of America announced gun policies that spring, their written responses to a questionnaire from the commission contradicted their public statements, Miguez said.
Last August 14, Louisiana’s Attorney General Jeff Landry wrote State Treasurer John Schroder, saying: “The selection of underwriters for the state ‘s issuance of GARVEE bonds is entirely discretionary. Citi and BAML’s misleading and disingenuous responses alone justify excluding them from further consideration.” He said Citi and BAML shouldn’t profit as state contractors, while they exclude businesses from banking services and deny citizens rights protected by the state constitution.
This spring, Miguez introduced House Bill 413, which would make it discriminatory for a financial institution to refuse services to anyone because of their lawful engagement in firearms and ammunition commerce. “HB 413 passed the House and then was parked in the Senate Revenue & Fiscal Committee, to be taken up in a future session,” Miguez said last week. “The bill is intended to prohibit financial institutions from refusing services to a person or organization solely because they’re involved in lawful commerce in firearms or ammunition.”
HB 413 aims to protect the state’s gun and ammunition dealers, gunsmiths, gun ranges, instructors and trade association, Miguez said. It’s supported by the National Shooting Sports Foundation, the Louisiana Shooting Association, Firearm Professionals of Louisiana, the Home Defense Foundation of New Orleans and the Louisiana Family Forum. State Republican officials, including Treasurer Schroder, Secretary of State Kyle Ardoin and Attorney General Landry, support the bill.
Meanwhile, on the anti-firearms side, a Washington, DC group, Guns Down America, this spring graded banks on their commitments to safety and relations with industry. The group examined financial and legal filings to see how much business banks had done with manufacturers, the National Rifle Association and Congressional recipients of NRA money. They gave Citigroup a B; Goldman Sachs a C; Bank of America a C; Chase Bank an F; and Wells Fargo an F.
Last week, Citigroup spokesman Mark Costiglio had no comment about whether Citi can participate in Louisiana’s bond financing now. And at the state’s treasury department, spokeswoman Ruth Wisher also had no comment about Citi.
As for the impact of Citi’s firearms policies, the bank’s CEO Mike Corbat at a shareholder meeting in April said that people brought in business in response, while others took business away, but neither side had materially affected the company’s bottom line.
This article originally published in the June 17, 2019 print edition of The Louisiana Weekly newspaper.
