While I am far from agreeing with everything Trump does, I think it might be interesting to hear what the TDS crowd has to say about this.
https://www.wsj.com/finance/banking...Bq&reflink=desktopwebshare_permalinkBig Banks, Worried About Being Trump’s Next Target, Race to Appease RepublicansTexas and Oklahoma have banned some banks from state contracts, saying they discriminate against the gun and fossil-fuel industries
Big banks are trying to get out of the crosshairs of Republican states that are cracking down on companies for “woke” policies that conservative policymakers say are illegal and discriminatory.
Representatives from JPMorgan Chase JPM 1.19%increase; green up pointing triangle, Citigroup C 1.16%increase; green up pointing triangle, Wells Fargo WFC 2.14%increase; green up pointing triangle and other big banks met in recent weeks with officials in states including Texas and Oklahoma to defend against allegations that they refuse to do business with industries such as gun manufacturing and fossil-fuel extraction, people familiar with the discussions said.
Banks are also worried about a bigger threat: that President Trump could turn the power of the federal government against banks, as he has with universities and big law firms.
The Trump administration is considering an executive order on “debanking,” according to people familiar with the matter.
Leaders in a growing number of conservative states have accused banks of boycotting industries for political reasons, rather than based on traditional factors such as the ability to repay debts. States including Texas and Oklahoma have blacklisted some banks from state contracts as a result. Banks say they weigh risks when deciding who to do business with and limit ties with companies for financial, legal and reputational reasons.
“I’m not asking them to be MAGA banks,” Todd Russ, Oklahoma’s state treasurer, said in an interview. “I want them to manage my portfolio and stay out of these political ideologies. I think they realize that’s a fair place to be.”
Russ said JPMorgan, Bank of America BAC 1.76%increase; green up pointing triangle and Wells Fargo have met with him to try to get off Oklahoma’s blacklist of companies that discriminate against oil-and-gas companies.
Earlier this month, Citigroup met with Texas Gov. Greg Abbott to discuss the bank’s decision to end its policy of not doing business with companies that sell firearms to people under the age of 21, a person familiar with the matter said.
Citigroup and JPMorgan updated their policies this year to clarify that they don’t discriminate on political grounds, which the banks said were already part of their existing practices. They were also among the big banks that recently left the Net-Zero Banking Alliance, an industry climate group targeted by Texas’ attorney general.
Goldman Sachs GS 0.95%increase; green up pointing triangle, Morgan Stanley MS 0.97%increase; green up pointing triangle, JPMorgan and Wells Fargo have removed some limitations on working with the coal sector or have been discussing whether to do so, according to people familiar with the matter. Bank of America dropped its ban on coal companies in late 2023.
A spokeswoman for JPMorgan said, “We believe understanding policymakers’ perspectives while sharing our own makes us a better bank.” Bank of America said it serves clients in the oil-and-gas industry, as well as those working in clean and renewable energy.
Wells Fargo and Citigroup declined to comment.
A new cause célèbre
Discrimination in banking has become a cause célèbre under Trump, with a coalition of Christians, conservatives, and crypto groups accusing big banks of denying them services on political grounds. The Trump Organization sued Capital One COF 1.65%increase; green up pointing triangle in March over the bank’s decision in 2021 to shut down hundreds of its corporate accounts. Capital One disputed in a court filing that the account closures occurred because of disagreement with Trump’s politics.
“I would love to see some of the big banks go extinct, because, honestly, they deserve it,” Eric Trump said in May at a crypto conference in Las Vegas.
Banks can shut down accounts without explanation for a number of reasons, which has long fueled allegations of discrimination.
In recent years, banks also limited their ties with some industries as they sought to incorporate environmental, social and corporate-governance standards into how they do business.
The moves fueled a backlash. Texas and Oklahoma passed laws forbidding state agencies from doing business with companies they say discriminate against the gun or oil-and-gas industries. Tennessee and Idaho passed similar laws more recently.
Banks on states’ blacklists could lose state pension funds as clients and other state business. The risks can be bigger. In Florida, the law cites the possibility for “dissolution or reorganization” if banks are found to be making decisions based on customers’ political or religious views.
An executive order from Trump could also jeopardize banks’ ties with the federal government, such as the sale of Treasury bonds. Drafting of the executive order could be taken up by Trump’s Domestic Policy Council, run by Vince Haley, with other White House departments weighing in, people familiar with the matter said.
Stepped-up talks
Many large banks’ meetings with Republican states have increased this year, according to people familiar with the matter.
Big banks have also told Republican leaders on the Senate Banking Committee that regulators required them to consider reputational risks posed by their customers, including negative press about companies.
Sen. Tim Scott (R., S.C.), chair of the Senate Banking Committee, in March proposed legislation that would prohibit regulators from considering reputational risks. Since then, regulators under Trump have moved to eliminate the concept from their bank exams, with the Federal Reserve Board on Monday becoming the latest to do so.
Russ, Oklahoma’s treasurer, credited JPMorgan for leaving a number of climate alliances, which he said proves the bank is serious about changing its policies. But the bank remains on the state’s blacklist, along with Bank of America, Wells Fargo and others.
“There’s been a lot of political posturing and philosophical interjections into the financial decisions that these big companies have been making,” Russ said. “We want them to work right down the middle. No activism, no politics, no philosophical assertions.”
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