Texas crackdown on banks that ‘discriminate’ against guns backfires, costing taxpayers up to $500M

Texas lawmakers, frustrated with what they viewed as liberal political activism from some of the titans of American industry, banned banks last year from doing business with Texas municipalities unless they could certify to the state attorney general they don’t “discriminate” against the gun industry. The Legislative Budget Board, which estimates the costs of proposed legislation, predicted no significant financial impact on the state or on local governments. But in the first eight months since the law was enacted, local governments seeking to finance building projects through bonds — for instance school districts trying to build new football stadiums, cities looking to upgrade their airports — have already paid between $300 million and $500 million more in increased interest payments, according to a study from a University of Pennsylvania professor and a Federal Reserve economist based in Washington.

And the paper estimates the annual cost in higher interest payments will be around $445 million per year going forward, if nothing changes. “There’s a cost to making this political statement. We can say that cost for Texas is between $300 million and $500 million dollars,” said Daniel Garrett, the professor. The bill, SB19, was aimed at large banks that reconsidered their investment in the gun industry in the wake of the 2018 Stoneman Douglas High School shooting that left 17 dead. For instance, Bank of America refuses to fund companies that build military style rifles for civilian use. JP Morgan Chase won’t fund companies that sell guns to people under the age of 21. And Citigroup won’t fund those that don’t background-check all buyers. Citigroup announced its updated policy on guns in a blog post one month after the Parkland massacre, with an executive vice president calling for “our grief to turn into action” and for the U.S. to “adopt common-sense measures that would help prevent firearms from getting into the wrong hands.”