Banks face pressure for firearms industry decisions

Sharon Fisher//May 3, 2018

Banks face pressure for firearms industry decisions

Sharon Fisher//May 3, 2018

Boise’s Wells Fargo Center. Wells Fargo has reiterated its support for firearms manufacturers, as other banks move away from clients that make and sell military-style weapons. File photo.

Idaho Sen. Mike Crapo, chairman of the Senate Banking Committee, has criticized two banks for corporate decisions limiting firearms in the wake of incidents such as February’s shooting at a school in Parkland, Florida.

In a March 22 blog post, Citigroup Inc. announced that it would require new retail sector clients not to sell firearms to someone who hasn’t passed a background check, to restrict the sale of firearms for individuals under 21 years of age, and not to sell bump stocks or high-capacity magazines.

Bank of America made a similar statement. “We want to contribute in any way we can to reduce these mass shootings,” said Anne Finucane, Bank of America vice chairman, in an interview on Bloomberg. While the bank did have a few clients that manufacture military-style firearms, it was having discussions with those vendors and it was not the bank’s intent to underwrite or finance such products in the future, she said.

photo of senator mike crapo
Idaho Sen. Mike Crapo

In response, Crapo wrote to each of the two institutions criticizing them for their actions. “I am concerned when government agencies use their power to try to cut off financial services for lawful businesses they may disfavor,” he wrote. “I am also concerned when large national banks use their market power for similar purposes.”

Neither Bank of America nor Citigroup would comment on Crapo’s letter.

Some other national banks have also examined their relationships with firearms companies in recent months.  “We do have robust risk management practices and policies associated with this and we have had for a number of years,” said Marianne Lake, chief financial officer at JPMorgan Chase in a recent earnings call, responding to a question about financing military-style weapon for non-military purposes. “We continue to always refine them and work on them.  As a result, our exposures have come down significantly and are pretty limited.”

photo of julie fogerson
Julie Fogerson

Other banks, most notably Wells Fargo, have reiterated their support of firearms manufacturers. “Firearms manufacturers are among the hundreds of different industries that Wells Fargo banks,” said Julie Fogerson, assistant vice president of Idaho regional communications at Wells Fargo, in Boise. ”We have a strict due diligence process that monitors our customer’s adherence to all state and federal laws in order to be a customer of the bank. Wells Fargo wants schools and communities to be safe from gun violence, but changes to laws and regulations should be determined through a legislative process that gives the American public an opportunity to participate and not be arbitrarily set by a bank.”

Financial institutions with more of an Idaho regional presence steered clear of the issue, with Idaho Central Credit Union, First Interstate Bank, and Zions Bank representatives all saying they had no comment. “Credit unions that are members of the NWCUA make their own determinations about the products and services that they offer, based on the needs of their members and their local communities,” said Lynn Heider, vice president of public relations for the Northwest Credit Union Association, which represents Idaho credit unions after its merger with the Idaho Credit Union League.

“Zions avoids taking a stance on political issues outside of the financial services industry, believing that it is best that the appropriate legislative body set policy,” said Rob Brough, Zions Bank executive vice president. “Zions strives to bank customers who obey the law and who have a risk profile that is consistent with Zions’ standards.”

Crapo’s letters criticized banks for using “their market power to manage social policy by withholding access to credit to customers and companies they disfavor.” Over time, banks have made other decisions that influence social policy, such as investing in renewable energy (which Crapo also criticized).

In addition, the federal government has also put restrictions on banks that could be said to influence social policy. Most notable was the Obama administration’s Operation Choke Point, intended to discourage banks from doing business with companies ranging from payday lenders to gun retailers. While that program ended in August, some industries reportedly still find it difficult to find banks that support them, such as the marijuana industry in states where that is legal, noted the Brookings Institution. More broadly speaking, legislation such as the Community Reinvestment Act, which guides banks’ philanthropic efforts, could also be characterized as an attempt to effect social policy. Crapo’s office wouldn’t comment on the senator’s opinion about banking and social policy issues other than firearms.

Some organizations are also taking steps to pressure banks to change their firearms policies. For example, on a national level, the Sierra Club is asking supporters to tell Wells Fargo to stop funding gunmakers, as well as oil pipeline companies.

In response to incidents such as Parkland, several retailers have decided to limit firearms sales.