Dozens upon dozens of Texas banks said they won’t discriminate against gun businesses

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 many banks to sign the declaration was Cabrera Capital Markets, LLC, a Chicago-based bank. This is in compliance with Texas law that bars local and state governments from working in partnership with companies that ban 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 institutions, including those from local communities like First State Bank of Uvalde and large multinational corporations such as Barclays, submitted one of two standardized versions of Paxton’s letter. The other was published by the non-profit Municipal Advisory Council of Texas. The form letters from the banks state that they have not adopted a policy, guideline, or direction that discriminates against firearm entities or trade associations. “

Cabrera Capital Markets executives didn’t respond to CBS News’s emails or phone calls.

The law is a reflection of the difficult waters many businesses navigate in an age of increasing divisions, according to Steven Craig . Craig says that corporations pushing for political positions can lead to inefficient markets.

“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 partnerships 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 the possibility of governments responding to their actions, as was evident 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 take on retail sector clients or partners 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 email requests for clarification about whether Citi’s and JPMorgans’ policies were discriminatory towards the firearms sector. The first reported by The New York Times.

Banks accused of falsely asserting that they are complying with Texas law could face criminal charges.

According to Jeffrey Fagan, a Columbia University professor of law, banks could soon be required to comply with regulators in other states that are trying to protect firearms makers. After the Florida law became famous, Fagan made a parallel to the rise of “stand your ground,” self-defense laws.

” This template was popular in conservative states. It became, in some ways, a type of contagion of thought. Fagan stated that the idea and law are one. Fagan said, “And I don’t see why this shouldn’t be susceptible 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 asked if the laws could run afoul with Supreme Court precedents regarding 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 can’t you draw an analogy and say that banning corporations from doing so is infringing their right to political speech?

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