Louisiana bond commission pulls bank from refinancing deal over gun policy

Wells Fargo will handle the $700 million deal instead of JPMorgan

By: - November 18, 2021 9:09 pm
Louisiana Capitol Building

Julie O’Donoghue/Louisiana Illuminator

Louisiana’s State Bond Commission Thursday changed its mind about which bank should handle the refinancing of the $700 million worth of state debt based on the financial institutions’ policies toward gun manufacturers.

The Bond Commission unanimously voted to give Wells Fargo the state’s refinancing contract after concerns were raised last month about JPMorgan Chase & Co., the bank originally selected to handle the deal. Republicans on the Bond Commission are upset that JPMorgan refuses to do business with gun manufacturers who sell military-style weapons to consumers.

Switching banks isn’t expected to cost Louisiana extra money. JPMorgan had proposed charging Louisiana a lower fee for its services than Wells Fargo, but Wells Fargo has since agreed to lower its rate to the same level, Schroder said. The refinancing is expected to save the state $40 million overall, according to Bond Commission staff. 

But the vote highlights the extent to which the Bond Commission — which includes several statewide elected Republicans — will go to shore up its credentials on gun rights.

“I’m not selling our Second Amendment rights to corporate America,” State Treasurer John Schroder, the Bond Commission chairman, said. 

Banks that seek to do business with the Bond Commission already have to affirm on a questionnaire that they do not infringe on the “constitutionally protected rights of the citizens of the State to lawfully keep and bear arms,” before their applications are approved.

JPMorgan doesn’t believe its refusal to do business with some gun manufacturers has any impact on constitutional rights, including a person’s ability to buy and carry weapons. Gun owners are not prohibited from using JPMorgan’s services, the bank said in a letter to Louisiana officials.

But the bank’s leaders did not answer follow-up questions Schroder sent them over the last month about its restrictions on military-style gun manufacturers, the treasurer said. Other banks provided additional information about their gun policies when asked, he said. That was a factor in swapping in Wells Fargo for the business deal. 

The governor’s staff objected to setting a litmus test on guns for investment banks that handle the state’s finances.

Matthew Block, Gov. John Bel Edwards’ general counsel and representative on the Bond Commission, said limiting the number of banks that can work for the state will eventually drive up costs for taxpayers because there will be less competition for the work.

“What we’re going to end up with is Joe’s Savings & Loan being the one we have to deal with at the end of this,” Block said. 

This isn’t the first time the Bond Commission has prohibited banks from handling the state’s finances over gun policies. Last year, it excluded Citigroup from a list of approved banks  because Citigroup refuses to do business with gun sellers that sell weapons to people who don’t pass a background check, that sell weapons to people under 21 years old, and that sell military-style weapons. 

While the Bond Commission unanimously supported the measure to give the debt refinancing business to Wells Fargo, the vote on the measure was halted for more than 30 minutes by a public spat between Schroder and Attorney General Jeff Landry, another commission member. Schroder and Landry, both Republicans, are potential candidates for governor in 2023. 

Landry had been pushing on social media for the Bond Commission to reject any proposal to give JPMorgan the state’s refinancing business, but hadn’t been informed that the recommendation was changed ahead of time to give the business to Wells Fargo.

Landry complained that his office had not been told by Schroder’s staff that the recommendation had been adjusted. Schroder took offense, interpreting Landry’s comments as a criticism of the Bond Commission employees. 

“I don’t believe in my four years as treasurer that you’ve ever showed up at one of these [Bond Commission] meetings. So what is your point? What are you trying to get at?” Schroder asked Landry.

“I’ve been at these meetings in the last four years. In fact, this whole [gun rights] issue was brought about because I was at a particular meeting,” Landry replied.

After some more sparring, Schroder cut off Landry’s microphone.

“I own the mic!” Landry said loudly after his microphone went silent.

“Mr. Attorney General: You don’t own the mic,” Schroder responded.

There was more back and forth between the two, but Landry’s microphone was turned back on and he continued to complain about not being kept in the loop about the bank change.

“If, as you say, the communication between my staff and your staff was as tight as it would have been, then this would not have happened,” Landry said.

Schroder then complained  that Landry had not discussed his concerns about JPMorgan’s gun manufacturer policy with Schroder personally before talking about them on social media and to reporters.

“If you have a problem going on with some member of this staff, or with me, I would suggest that you call me. That’s normally the practice,” Schroder said.

Schroder then said Landry’s staff refused to meet with his staff to discuss the legal ramifications of passing over JPMorgan for the refinancing work ahead of Thursday’s meeting.

“This is gamesmanship. I’m not into gamesmanship. I’m done with it,” Schroder said.

Then, Commissioner of Administration Jay Dardenne — a member of the Bond Commission who comes from the Edwards administration — ended the exchange by saying:

“We’re about an hour away from high noon, but I think we can declare this gun fight a draw.”

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Julie O'Donoghue
Julie O'Donoghue

Julie O’Donoghue is a senior reporter for the Louisiana Illuminator. She’s received awards from the Virginia Press Association and Louisiana-Mississippi Associated Press.