banks said state would bill texas senate

techsuch May 9, 2021 0 Comments

Must-know: The role of technology in the airline industryBloomberg(Bloomberg) — Bank of America Corp. and Citigroup Inc., the top twounderwriters in the $3.9 trillion municipal bond-market, are at risk ofgetting shut out of Texas because of a push by Republican state lawmakers topunish the banks for their restrictive gun policies.The legislation, SenateBill 19, would block government entities from contracting with banks and otherfinancial services providers that have policies that restrict business withthe firearms industry. Under the bill, companies with 10 employees or moreseeking a government contract worth at least $100,000 would have to verify inwriting that they do not have a policy or directive that “discriminates”against the firearms or ammunition industries.It’s targeted at large banks andfinancial institutions that have attempted to “use financial pressure toinfringe upon our Second Amendment rights,” according to a statement from thesponsors in an analysis of the bill. The legislation is in flux: it alreadypassed the state Senate and is pending in the Texas House of Representatives.While a House companion bill includes language that would exempt debt salesand the “deposit or investment of funds,” the author in that chamber didn’tpursue adding that exemption in the Senate version.“Any company that usesfinancial pressure in order to limit Texans’ ability to purchase guns orammunition should not be tolerated,” Senator Charles Schwertner, an author ofthe legislation, said in a committee hearing on the bill earlier thismonth.The Texas move to punish the banks comes as Republicans nationally havecriticized companies for stepping into politics. Senate Minority Leader MitchMcConnell said corporate executives should “stay out of politics” in responseto the backlash against a Georgia law that limits voting access.BlackRock’sFink, Buoyed by Record Inflows, Vows ‘Loud’ ActivismIf the Senate version isenacted, the law could hurt the banks’ municipal underwriting businesses inTexas, a huge market for state and local debt deals. Texas-based borrowerssold more than $58 billion of bonds in 2020, the second-most of any statebehind California, according to data compiled by Bloomberg. As part of bondofferings, borrowers often hire banks ahead of time and pay them a fee forunderwriting the sales.Elizabeth Reich, chief financial officer of Dallas,said the bill could have wide-ranging impacts on the city, including limitingcompetition for its debt sales. The bill could also affect bankingrelationships: Dallas had $257 million in deposit with Bank of America at theend of February, she said.“If I’m limited in who I can do business with andtalk to and engage with, that’s going to raise my costs and increase the costto the taxpayers,” she said.The banks announced policies that set restrictionson the firearms industry in 2018 after a shooting at Marjory Stoneman DouglasHigh School in Parkland, Florida, left 17 people dead. Citigroup said it wouldprohibit retailers that are customers of the bank from offering bump stocks orselling guns to people who haven’t passed a background check or are youngerthan 21.Bank of America also announced in 2018 it would stop making new loansto companies that make military-style rifles for civilian use. Its policy cameafter dozens of employees lost family members or suffered other trauma relatedto mass shootings in the past few years.Gun-friendly Texas has becomeimportant to the National Rifle Association, which filed for bankruptcyprotection this year and said it would move to the state. In an article thismonth, the Institute for Legislative Action, an NRA lobbying arm, celebrated“pro-Second Amendment” legislation in Texas, including the legislationtargeting the banks.BofA Says 151 Employees Were Affected by Mass Shootings inU.S.‘Discriminatory’ PoliciesIt’s unclear how wide-reaching the law would be,and there could be further changes to the language. The legislation wouldaffect governmental entities, which Texas government code defines as stateagencies, as well as political subdivisions like counties, municipalities andschool districts — a potentially wide swath of muni borrowers.GiovanniCapriglione, the lawmaker who authored the House bill, said in a writtenresponse to questions from Bloomberg News that he proposed the bill because ofa shortage of ammunition in the state “caused by discriminatory policiesimplemented by banks.”“It is estimated that over 26,000 Texans are employed bythis industry and they account for about $4.5 billion in economic impact,”Capriglione said. “If these businesses can’t operate because banks refuse toprovide them with access to essential services, then the state loses thesejobs and the economic impact they provide.”Capriglione confirmed that banks’underwriting business would be affected by Senate Bill 19.Dan Patrick, thelieutenant governor who wields strong influence in the Texas legislature, saidin a statement this month that he’s supportive of the Senate bill, citing theSecond Amendment. A spokesperson for his office did not respond to a requestfor comment. The NRA lobbying arm’s article said that the bill was prioritizedby Patrick.It’s not the first time that Republican state officials have soughtto punish the two banks for their gun policies. In 2018, Louisiana officialsvoted to ban Bank of America and Citigroup from working on a debt sale.TexasImpactTexas offers big business in the $3.9 trillion municipal bond market.The state’s booming population makes it ripe for future sales as the need fornew roads, schools and other infrastructure projects mounts.The bill could cutoff Texas muni issuers from the two biggest banks in the state and local debtmarket. Citigroup was the biggest underwriter of Texas muni-bond sales in2020, credited with managing more than $6 billion of sales, and Bank ofAmerica was ranked as the fifth-biggest last year, credited with managingabout $3.8 billion of bonds, according to data compiled by Bloomberg.Overall,Bank of America and Citigroup are the two biggest municipal underwriters,managing a combined 25% of long-term state and local debt sales so far thisyear, according to data compiled by Bloomberg.Spokespeople for both banksdeclined to comment. SIFMA, a lobbying group for broker-dealers and investmentbanks, also declined to comment.Kevin Lyons, a spokesperson for the TexasComptroller of Public Accounts, said in an emailed statement that the officeis following the legislation and reviewing its contracts to determine whatimpact it would have on its services.He said the bill would require stateagencies to include a new provision in contracts made after Sept. 1. “If banks(or other entities) do in fact maintain such a policy it will likely bedifficult for them to sign off on such a contract in the future,” he said inthe statement.For more articles like this, please visit us atbloomberg.comSubscribe now to stay ahead with the most trusted business newssource.©2021 Bloomberg L.P.Relatively Low Leverage Gives Tech Companies FlexibilityBloomberg(Bloomberg) — Bank of America Corp. and Citigroup Inc., the top twounderwriters in the $3.9 trillion municipal bond-market, are at risk ofgetting shut out of Texas because of a push by Republican state lawmakers topunish the banks for their restrictive gun policies.The legislation, SenateBill 19, would block government entities from contracting with banks and otherfinancial services providers that have policies that restrict business withthe firearms industry. Under the bill, companies with 10 employees or moreseeking a government contract worth at least $100,000 would have to verify inwriting that they do not have a policy or directive that “discriminates”against the firearms or ammunition industries.It’s targeted at large banks andfinancial institutions that have attempted to “use financial pressure toinfringe upon our Second Amendment rights,” according to a statement from thesponsors in an analysis of the bill. The legislation is in flux: it alreadypassed the state Senate and is pending in the Texas House of Representatives.While a House companion bill includes language that would exempt debt salesand the “deposit or investment of funds,” the author in that chamber didn’tpursue adding that exemption in the Senate version.“Any company that usesfinancial pressure in order to limit Texans’ ability to purchase guns orammunition should not be tolerated,” Senator Charles Schwertner, an author ofthe legislation, said in a committee hearing on the bill earlier thismonth.The Texas move to punish the banks comes as Republicans nationally havecriticized companies for stepping into politics. Senate Minority Leader MitchMcConnell said corporate executives should “stay out of politics” in responseto the backlash against a Georgia law that limits voting access.BlackRock’sFink, Buoyed by Record Inflows, Vows ‘Loud’ ActivismIf the Senate version isenacted, the law could hurt the banks’ municipal underwriting businesses inTexas, a huge market for state and local debt deals. Texas-based borrowerssold more than $58 billion of bonds in 2020, the second-most of any statebehind California, according to data compiled by Bloomberg. As part of bondofferings, borrowers often hire banks ahead of time and pay them a fee forunderwriting the sales.Elizabeth Reich, chief financial officer of Dallas,said the bill could have wide-ranging impacts on the city, including limitingcompetition for its debt sales. The bill could also affect bankingrelationships: Dallas had $257 million in deposit with Bank of America at theend of February, she said.“If I’m limited in who I can do business with andtalk to and engage with, that’s going to raise my costs and increase the costto the taxpayers,” she said.The banks announced policies that set restrictionson the firearms industry in 2018 after a shooting at Marjory Stoneman DouglasHigh School in Parkland, Florida, left 17 people dead. Citigroup said it wouldprohibit retailers that are customers of the bank from offering bump stocks orselling guns to people who haven’t passed a background check or are youngerthan 21.Bank of America also announced in 2018 it would stop making new loansto companies that make military-style rifles for civilian use. Its policy cameafter dozens of employees lost family members or suffered other trauma relatedto mass shootings in the past few years.Gun-friendly Texas has becomeimportant to the National Rifle Association, which filed for bankruptcyprotection this year and said it would move to the state. In an article thismonth, the Institute for Legislative Action, an NRA lobbying arm, celebrated“pro-Second Amendment” legislation in Texas, including the legislationtargeting the banks.BofA Says 151 Employees Were Affected by Mass Shootings inU.S.‘Discriminatory’ PoliciesIt’s unclear how wide-reaching the law would be,and there could be further changes to the language. The legislation wouldaffect governmental entities, which Texas government code defines as stateagencies, as well as political subdivisions like counties, municipalities andschool districts — a potentially wide swath of muni borrowers.GiovanniCapriglione, the lawmaker who authored the House bill, said in a writtenresponse to questions from Bloomberg News that he proposed the bill because ofa shortage of ammunition in the state “caused by discriminatory policiesimplemented by banks.”“It is estimated that over 26,000 Texans are employed bythis industry and they account for about $4.5 billion in economic impact,”Capriglione said. “If these businesses can’t operate because banks refuse toprovide them with access to essential services, then the state loses thesejobs and the economic impact they provide.”Capriglione confirmed that banks’underwriting business would be affected by Senate Bill 19.Dan Patrick, thelieutenant governor who wields strong influence in the Texas legislature, saidin a statement this month that he’s supportive of the Senate bill, citing theSecond Amendment. A spokesperson for his office did not respond to a requestfor comment. The NRA lobbying arm’s article said that the bill was prioritizedby Patrick.It’s not the first time that Republican state officials have soughtto punish the two banks for their gun policies. In 2018, Louisiana officialsvoted to ban Bank of America and Citigroup from working on a debt sale.TexasImpactTexas offers big business in the $3.9 trillion municipal bond market.The state’s booming population makes it ripe for future sales as the need fornew roads, schools and other infrastructure projects mounts.The bill could cutoff Texas muni issuers from the two biggest banks in the state and local debtmarket. Citigroup was the biggest underwriter of Texas muni-bond sales in2020, credited with managing more than $6 billion of sales, and Bank ofAmerica was ranked as the fifth-biggest last year, credited with managingabout $3.8 billion of bonds, according to data compiled by Bloomberg.Overall,Bank of America and Citigroup are the two biggest municipal underwriters,managing a combined 25% of long-term state and local debt sales so far thisyear, according to data compiled by Bloomberg.Spokespeople for both banksdeclined to comment. SIFMA, a lobbying group for broker-dealers and investmentbanks, also declined to comment.Kevin Lyons, a spokesperson for the TexasComptroller of Public Accounts, said in an emailed statement that the officeis following the legislation and reviewing its contracts to determine whatimpact it would have on its services.He said the bill would require stateagencies to include a new provision in contracts made after Sept. 1. “If banks(or other entities) do in fact maintain such a policy it will likely bedifficult for them to sign off on such a contract in the future,” he said inthe statement.For more articles like this, please visit us atbloomberg.comSubscribe now to stay ahead with the most trusted business newssource.©2021 Bloomberg L.P.

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