JPMorgan Chase was removed on Thursday from a $700 million Louisiana municipal bond deal after the bank’s stance on guns drew criticism from state Republican officials.
The state bond commission voted to have Wells Fargo replace JPMorgan, the largest U.S. bank, as senior manager on the deal. The decision came after state Treasurer John Schroder, a Republican, said his team was scrutinizing JPMorgan’s gun policies after Chief Executive Jamie Dimon told a congressional committee earlier this year that his firm won’t finance companies that make military-style weapons for consumers.
“I’m not selling our Second Amendment rights to corporate America,” Schroder, the panel’s chair, said at the meeting in Baton Rouge.
In 2019, Louisiana began asking banks whether they have policies that infringe on citizens’ rights to bear arms as part of their application to underwrite bond deals. At the time, JPMorgan said it didn’t. Schroder said his office sent a new “qualifying question” to banks to participate in the bond sale asking them whether they do or do not finance the manufacture of military-style weapons for civilian use.
JPMorgan didn’t submit an answer to that query, and that lack of response led to their disqualification from underwriting the bond sale, Schroder said. A spokesperson for JPMorgan didn’t have an immediate comment after the vote Thursday.
Originally, JPMorgan was chosen to underwrite the bonds after offering a lower fee than other banks, but now Wells Fargo will match that fee, according to Lela Folse, director of the bond commission, who spoke during the meeting Thursday.
Matthew Block, executive counsel for Gov. John Bel Edwards, a Democrat, questioned the process around disqualifying the bank.
“This is a road, and it leads us to someplace that none of us know where we’re going,” he said during the meeting, noting the state has already stopped hiring Bank of America and Citigroup to underwrite bond sales over gun issues. Block said other banks would offer less competitive borrowing terms as a result.
“We are telling the world — not just Louisiana, not just New York, the world — that three of the biggest banks to loan us money at a good rate of interest, we don’t want to do business with them,” he said. “And what we are going to end up with is Joe’s Savings and Loan be the one that we have to deal with at the end of this.”
JPMorgan is also facing a hit to its public-finance business in neighboring Texas because of a law that seeks to punish Wall Street banks for wading into social issues. In September, a law went into effect there that bars state and local governments from hiring banks that moved to curtail ties to the firearms industry in the wake of mass shootings.
