Dozens of banks told Texas they don’t “discriminate” against gun companies
Two days after 19 children and two teachers were gunned down in a Texas elementary school on May 24, an investment banking firm sent a letter to Texas Attorney General Ken Paxton promising not to “discriminate” against the firearms industry. The latest of dozens of banks to make the declaration was Cabrera Capital Markets, LLC, a Chicago-based bank. This was in compliance with legislation that bars Texas state and local governments, as well as other institutions, from working with companies that prohibit investments in ammunition or firearms. The letters, more than 80 of which have been reviewed by CBS News, throw in stark relief the fraught political environment corporations face when called upon to respond to mass shootings.
Most of these institutions, including local businesses like the First State Bank of Uvalde and multinational corporations such as Barclays, submitted one of two standardized forms of Paxton’s letter published by Paxton and the non-profit Municipal Advisory Council of Texas. The form letters from the banks state that they have not adopted a policy, guidance, or direction that discriminates against firearm entities or firearm trade associations. “
Cabrera Capital Markets executives didn’t respond to CBS News’s emails or phone calls.
According to Steven Craig, an economics professor at the University of Houston, the law reflects the difficult waters many companies navigate in an age of increasingly divided politics.
“The fact that they’re putting political risk in U.S. commercial activities is a sign that we’re not in good times,” said Craig, adding that the law was a reaction to announcements in 2018 by JPMorgan Chase and Citigroup that they were limiting investments in firearms.
“Clearly they thought it was going to be commercially a good idea to tell their customers what they were doing, and that they were going to make these political judgments. Craig stated that they failed to consider that governments might respond to their actions, which was what happened in Texas.
A spokesperson for Citi, which submitted a version of Paxton’s form letter in October, pointed CBS News to a June 2021 company blog post responding to the Texas law. In the post, a CIti executive wrote that the company’s policies have not changed since 2018, when Citi said it would not invest with any business that sells guns to people under 21 years of age, or sell bump stocks or high-capacity magazines.
In JPMorgan’s letter, which was sent on May 13, the company said it does not discriminate against the firearms industry, but it “will not finance manufacturers of military style weapons for civilian use” and “generally consider the firearms industry high-risk, with clients subject to heightened due diligence requirements.”
Paxton did not respond to emails asking for clarification about whether Citi and JPMorgan’s policies were discriminatory towards the firearms industry. The first reported by The New York Times.
Banks accused of falsely claiming they are in compliance with Texas law could face criminal prosecution.
According to Jeffrey Fagan, a Columbia University law professor, banks may soon need to comply with regulators in other states that are trying to protect firearms makers. After the Florida law became famous, Fagan made a comparison with the spread of “stand your ground” self defense laws.
” This template was widely spread across conservative states. It became a kind if contagion of thought. Fagan stated that the idea and law are one and the same. “And I don’t see any reason why it can’t be subjected to the same type of contagion. “
Legislatures in at least eight other states — Arizona, Kansas, Kentucky, Missouri, Ohio, Oklahoma, South Dakota and West Virginia — are considering similar legislation, according to the National Shooting Sports Foundation, a firearms industry trade association that is advising legislators on the bills.
Fagan wondered whether these laws would run afoul the Supreme Court precedent on corporate speech.
“If we think back to Citizens United, investments by corporations as political speech was allowed,” Fagan said, referring to the 2009 landmark Supreme Court decision prohibiting the government from restricting corporate contributions to political campaigns. “Why don’t we make an analogy and say that if we ban companies from doing this, this is infringing their rights for political expression?”
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