A gun rack with assault rifles is displayed at a weapons retailer. (Getty Images)
The Louisiana State Bond Commission might further limit the state’s business with large banks based on their dealings with gun manufacturers and energy companies. Critics fear such a restriction could cost taxpayers more money by limiting competition for the state’s banking business.
Bond commission members intend to interview representatives from a handful of banks next week about their firearms and energy policies. If the banks’ views don’t align with the perspective of the Republican-majority commission, they could be removed from a list of qualified institutions that are invited to bid on state business, including an upcoming $275 million bond sale.
Attorney General Jeff Landry’s office pushed Thursday to disqualify six national banks – JPMorgan Chase & Co., Barclays, Morgan Stanley, Royal Bank of Canada, UBS and Wells Fargo – from Louisiana’s list of pre-approved financial institutions. But state legislators on the Bond Commission refused to exclude them before interviewing the banks’ representatives first.
Craig Cassagne, who represented the attorney general’s office at Thursday’s Bond Commission meeting, told the other members that JPMorgan should be blackballed because it limits the business it does with gun manufacturers that sell military-style weapons to people under 21. The five other banks also should be excluded – in Landry’s opinion – because they oppose fossil fuel production.
“They all appear to have policies where they do not finance the coal industry as a whole. They do not finance certain oil and gas exploration in Alaska or the Arctic. They don’t finance fracking in certain areas,” Cassagne said.
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If all six firms were excluded, that would leave just one large institution in the pool of banks that could be considered for Louisiana’s upcoming bond deal. The other 21 banks that have pre-qualified are midsize or smaller banks, according to staff.
“That takes out every large, commercial bank except for TD Securities,” said Lela Folse, director of the bond commission.
“We’ve usually used a large commercial bank,” she added.
Louisiana has already pulled back from doing business with two banks – Bank of America and Citigroup – over the companies’ refusal to work with certain firearms manufacturers. Eliminating more banks could result in Louisiana receiving less favorable options when it comes to borrowing money and other financing deals, critics have warned.
Bob Lamb, the bond commission’s former financial adviser, told State Treasurer John Schroder last year that Louisiana would likely lose money if it put more constraints on the number of banks it was willing to hire.
“It does limit us,” Lamb said to Schroder at a bond commission hearing last year. “We, I believe, have been successful in trying to minimize any kind of cost that might bring to you, but eventually it’s going to bite us in the butt if we continue.”
“Our bank list is getting short,” Lamb added.
We’re going to be imposing on the taxpayers of Louisiana higher interest rates on their bonds and that’s not the job – the fiduciary responsibility – that I’m taking on as a member of this commission. – Senate President Page Cortez
We’re going to be imposing on the taxpayers of Louisiana higher interest rates on their bonds and that’s not the job – the fiduciary responsibility – that I’m taking on as a member of this commission.
– Senate President Page Cortez
Schroder eventually replaced Lamb with another financial adviser who had not been critical of the bond commission’s restrictions on banks. Schroder and Landry are Republican candidates for governor in this year’s election.
“The attorney general has no problem doing business with these smaller banks,” Cassagne said.
But Gov. John Bel Edwards’ financial chief, Commissioner of Administration Jay Dardenne, echoed concerns Thursday that Lamb mentioned last fall.
“It’s very clear. If we eliminate all these firms, the answer is we are not going to get the best possible rate,” said Dardenne, a member of the bond commission.
Louisiana Senate President Page Cortez, R-Lafayette, also brought up concerns at Thursday’s meeting.
“We’re going to be imposing on the taxpayers of Louisiana higher interest rates on their bonds and that’s not the job – the fiduciary responsibility – that I’m taking on as a member of this commission,” Cortez said.
“We cheat the taxpayers if we don’t get the lower rate. That’s the bottom line,” he added later.
The bond commission already does some upfront screening on the social policies of banks applying for the state’s business. Banks have to answer questions about their views of Israel, firearms and fossil fuels during the commission’s screening process.
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The treasury department has also reversed its position on at least one bank over the past few years. The bond commission declined to do business with JPMorgan over its policies toward firearms manufacturers in 2021, but then Schroder transferred hundreds of millions of dollars of the state’s business from the investment firm BlackRock to JPMorgan in 2022. At the time, Schroder said he was concerned about BlackRock’s policies toward the oil and gas industry.
On Thursday, Schroder also referred to JPMorgan as “the state’s bank,” explaining that JPMorgan handles so much of the state’s finances, that he is on the phone with JPMorgan staff nearly every day.
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