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B of A Snubs Two Gun Makers as Banking Becomes Politicized

In one of the more memorable scenes from Michael Moore's Bowling for Columbine, the filmmaker walks into a rural bank in Michigan and promptly receives a free rifle for opening a new account. Moore quips, "Do you think it's a little dangerous handing out guns in a bank?"

Bank of America thinks it's more than just a little dangerous – it reportedly wants to discourage some gun manufacturers from even having accounts at the bank. Largely neglected by the mainstream press, two particular firearms manufacturer cases represent an emerging political climate in U.S. banking. I am not accusing anyone in the media of "bias by omission" concerning the stories of McMillan Firearms Manufacturing and American Spirit Arms, but these are fairly recent episodes with considerable consequence.

B of A justified freezing the deposits of 10-year customer American Spirit Arms for three weeks beginning Dec. 18 by saying that the deposits were held for "further review." Even though American Spirit Arms is a properly licensed firearms manufacturer which submits to regular audits by the Bureau of Alcohol, Tobacco, Firearms and Explosives and the Department of Homeland Security, Bank of America also said, "We believe you should not be selling guns and parts on the Internet." Happily, the Internet played a role in resolving the issue, as business owner Joseph Sirochman told anchorperson Megyn Kelly on Fox News' America Live.

Another disturbing episode involved McMillan Firearms Manufacturing in April 2012. In expanding a routine "account analysis" meeting to include the larger political issue of overall business purpose, Bank of America directly suggested that the firearms manufacturer take its business elsewhere. Bank of America replied to the allegations here and McMillan responded again here.

Beginning in a visible way with the 2011 full-scale banking and payments blockade against WikiLeaks, politically motivated acts by private financial institutions appear to be on the rise. Banks are beginning to use considerable discretion in deciding what constitutes an illegal act and sometimes even an immoral act. Freeze the funds first – ask questions later. After all, it's their bank, right?

Yes, private companies can choose who they elect to do business with. However, it has a chilling effect when the directives come in a soft way from regulators or from a financially-supportive government. Historically, banks exercise discretion and that discretion can escalate into subtle differences in treatment. Such as when to file a suspicious activities report or when a customer's deposits and withdrawals start to look excessively high. 

Banks are increasingly in the role of enforcer and watchdog for the regulators. That is the basis of enforcement for many of the country's anti-money laundering laws and know-your-customer guidelines. The duty falls to the financial institutions and they are periodically reviewed as to their monitoring prowess. For the most part, banks do not have a choice in providing this quasi-enforcement role on behalf of the government, but it does set the stage for further encroachments into business and individual privacy.

Although Sirochman eventually succeeded in getting most of his deposits released, he still proceeded to open new accounts at a different bank.

Afterwards, Bank of America sent The Huffington Post this statement: "This customer's concerns have been resolved. Any spike in transaction volumes is routinely reviewed by the bank in order to protect our customers. This process is initiated regardless of the industry in which they do business." (Indeed, B of A still banks other gun manufacturers – a few weeks ago Chicago Mayor Rahm Emanuel sent CEO Brian Moynihan a letter urging the lender to pressure a firearm maker client to support new gun controls.) 

Something clearly got bungled at Bank of America. No bank wants that kind of publicity. Either a few rogue regional managers acted on their own behalf or a policy directive from the corporate level was miscommunicated. This is a complex issue and typically wide latitude is given on how policy directives are implemented, including triggers for account freezes and their subsequent release. It is also nearly impossible to ascertain or confirm from where a subtle directive originates, which is probably why these stories weren't investigated further.

How ironic it would be to have the North Country Bank and Trust from Moore's film acquired by Bank of America in the next wave of bank consolidations.

Jon Matonis is an e-money researcher and crypto economist focused on expanding the circulation of nonpolitical digital currencies. His career has included senior posts at Sumitomo Bank, Visa, VeriSign, and Hushmail. Currently, he serves on the board of the Bitcoin Foundation. Follow him on Twitter.


(7) Comments



Comments (7)
Blake, I agree that the real issue is banking procedures, but there are two types of procedures. One is bank-determined procedures and the other is regulatory-determined procedures. The latter is the one that I am raising as an issue because it is most likely to be abused on both ends. When a bank is placed more in the role of hyper-sensitive watchdog rather than payment processor, the potential exists for abuses and those abuses may not always originate from within the bank.
Posted by Jon Matonis, The Monetary Future | Wednesday, February 13 2013 at 4:44AM ET
Neal, Nothing was ever mentioned by the bank or the customer regarding the Office of Foreign Assets Control (OFAC) within the Treasury Department. It is disconcerting that you bring that up in light of the fact that one of the affected account holders was a small Arizona business with an owner/operator at the helm. That would not even be a justification for freezing assets. Also, your tendency to quickly become an apologist for the bank reveals your bias.
Posted by Jon Matonis, The Monetary Future | Tuesday, February 12 2013 at 2:57PM ET
This is not an gun issue. This is a bloated bank bureaucracy problem whereby a computer algorithm senses an anomaly and the program responded to it. The problem lies in the inadequacy of humans to react in a timely fashion to the situation. In the big picture, for a bank the size of BoA to recognize there is a problem with a customer who's deposits are the size of a speck of a gnat is not surprising. You could probably find business owners all over in any industry who are today pulling their hair out because it is impossible to get what you need out of these huge organizations. Why is American Banker fanning the flames rather than investigating the real issue - banking procedures.
Posted by BlakeWilson | Tuesday, February 12 2013 at 2:28PM ET
In neither the article nor the comments do I see anything having to do with the legal requirements the bank must follow under the rules of the Office of Foreign Assets Control (OFAC). It's just possible that the bank was either suspicious of or knew that its customer was doing business with companies, individuals or countries that are on the OFAC list(s) and was simply doing what the law requires of the bank...including not publishing any information about their suspicions or actions.
Posted by Neal | Tuesday, February 12 2013 at 2:05PM ET
Speaking of that incident that started all of this:

The Sandy Hook Controversy - James Tracy on GRTV

And this:

February 6, 2013

By, James H. Fetzer, Ph.D.
McKnight Professor Emeritus
Department of Philosophy
University of Minnesota Duluth

An Open Letter to FAU Faculty, Staff and Administration about Sandy Hook


I argue a three-man team entered the school. One was arrested in the school, cuffed and put on the lawn. Two went out a back door; one of them was arrested and the other apparently escaped.

Those arrested currently are not in police custody; their names were never released. That is a telling sign that we are being sold a story based on fiction rather than on fact.


The absence of any terrorist threat and the existence of more than 300 FEMA camps and special boxcars to carry dissidents to them have been deliberately withheld from the public.

Since Homeland Security has no foreign commitments, those camps and ammunition have to be for domestic consumption. Homeland Security appears to be gearing up to conduct a civil war with the American people -- but 80 million armed families stand in its way.


Veterans Today,12/20/2012, by Niall Bradley

'Sandy Hook massacre: Official story spins out of control'

"This logically tells us that the real perpetrators are being protected with cover stories of what really happened because if the truth were known, some section of the U.S. government would be implicated."

"...and the media focusing the emotional outcry onto the hot-button topic of gun control...I'm left wondering if this was actually the work of some highly trained professional hit team?"

'Was the massacre at Sandy Hook elementary school in Newtown, Connecticut, a psy-op, using what amounts to a 'death squad' and a carefully planned mission to terrorise people on behalf of the government, in combination with perception management to shape the narrative and vector the emotional fallout?"

The John Moore show said that one child had 11 bullet wounds and that #4 buckshot could do that with one shot from a shotgun. Have you heard any media reports of a shot gun at the scene?

SANDY HOOK ~ "I'm Sorry Governor, WHAT DID YOU SAY ???"
Posted by daddy warbucks | Tuesday, February 12 2013 at 1:33PM ET
I was not aware of B of A's actions, Thank you. BofA's VISA just went into the shredder and my checking accounts will be closed by end of day. B of A will not miss me, and I sure as hell will not miss them.
Wells Fargo here I come.
Posted by pdf15872758 | Tuesday, February 12 2013 at 12:30PM ET
Leave it to BofA to take a leadership role on a slippery slope: removing sin from banking. Sure, that will work! Maybe BofA should spend more of its time looking at its own practices, starting with the money it donates to politicians via its PAC programs. What could be worse than paying law makers to vote your way? If the answer is it legal to do so, then the same answer should have applied to the rifle manufacturer it recently chastised for being politically incorrect.
Posted by Duncan MacDonald | Tuesday, February 12 2013 at 11:57AM ET
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