Things are about to get interesting in Texas.
You see, as a general rule, most people don’t want to do business with companies that stand in opposition to them. That’s why we went years and years where companies didn’t discuss politics unless it directly impacted them. We could understand that.
Those days, unfortunately, are over. Now, it seems every company wants to make political stands, particularly in the financial sector. We’ve seen what happened in the credit card industry, as an example. That was far from the first effort, either. A lot of businesses in the gun industry lost their banks because of the industry they were in.
It’s been a bit of a nightmare, which brings me back to Texas.
It seems the attorney general there is done playing around.
Republicans have been ramping up pressure on the finance industry over what they say are their increasingly aggressive environmental, social and governance (ESG) practices.
“Citi’s designation as an SB-19 discriminator has the effect of halting its ability to underwrite most municipal bond offerings in Texas,” Paxton’s office told Reuters, referring to the law.
Texas enacted a law in 2021 that prohibited government contracts with entities that discriminated against the firearms industry.
“Citi does not discriminate against the firearms sector and believe we are in compliance with Texas law”, a Citigroup spokesperson said in an emailed statement to Reuters, adding that the company would remain engaged with the Texas AG office to review options.
Needless to say, this will spin up a fair bit of controversy. Citigroup says they’re doing everything right, but Texas says they’re not.
However, in a statement, the NSSF notes that Citigroup’s own website tells a completely different story.
“Their own website, however, demonstrates that the corporate bank refuses business with firearm businesses that do not comply with their unconstitutional restrictions,” the statement reads, noting that the bank requires things such as bump stock bans, age-based restrictions, and magazine restrictions.
In the same statement, NSSF Senior Vice President and General Counsel Larry Keane said, “The firearm industry is grateful for Attorney General Paxton’s steadfast commitment to protecting the Second Amendment rights of Texans and his refusal to bow to the corporate ‘woke’ agendas that seek to eliminate the Constitutional rights of all Americans.”
He added that this move serves as a warning to others in the financial industry.
The question now becomes, will it accomplish anything?
Texas is a big state, and not just by land mass. As a result, the ability to do business with governments in Texas is going to be a big factor for a number of banks. While some may be willing to skip out on underwriting municipal bonds in the state, a lot of them really do benefit from that business.
That means they have a choice to make. They can either try and impose restrictions on the firearm industry, restrictions they really have no business making, or they can do business with governmental entities in the state of Texas.
It’s not a difficult thing to understand. Will the banks start to get the hint, though?