Pressure on banks to rethink relationships with gun makers

The public and political forces that influenced businesses and investors to reconsider their relationships with the firearm industry have turned their attention to banks. The shift follows a successful campaign to encourage commercial entities to adopt gun rules lawmakers have failed to turn into policy and also pressured them to break ties to lobbying groups that block gun control legislation.

In the weeks since last month’s school shooting in Parkland, Florida, a handful of investment firms said they would provide greater transparency for clients by identifying financial products funding gun companies and dozens of businesses ended partnerships with the National Rifle Association because of its stance on gun control. But after nibbling around the edges, advocates started biting into key sources of financing for both gun makers and the NRA with the hopes of weakening the industry’s influence over lawmakers and in turn open up opportunities to pass gun control legislation.

Left-leaning news website ThinkProgress initiated efforts to exert pressure on businesses connected to the NRA — crossing out 24 of the 32 companies on their list — and then refocused energies on banks. In all, the website named more than a dozen banks servicing the gun industry. Only a handful of banks so far have responded to calls for action, but the complex relationship between an entity and financier prevent an immediate unraveling of business agreements and policy changes.

Wells Fargo said it plans “to engage our customers that legally manufacture firearms and other stakeholders on what we can do together to promote better gun safety for our communities,” according to a Bloomberg report published Wednesday. Since 2012, Wells Fargo has loaned out $431.1 million to gun companies and the NRA. Yet, the company inherited the NRA’s business — a $28 million loan with 6.08 percent interest, which pays Well Fargo some $1.2 million annually — in 2008 when it bought Wachovia Corp., which inherited the account when it bought First Union National Bank.

Bank of America issued a statement saying it joined “other companies in our industry to examine what we can do to help end the tragedy of mass shootings” and will “engage the limited number of clients we have that manufacture assault weapons for non-military use to understand what they can contribute to this shared responsibility.”

Berkshire Bank, which had operated as part of a pension fund that loaned Sig Sauer $178 million, clarified on Monday that it had ended its relationship with the New Hampshire gun maker 18 months ago. The bank was responding to calls for action following 2016’s Orlando nightclub shooting in which the gunman used a Sig rifle to murder 49 people.

Andrew Ross Sorkin, a business columnist for The New York Times, argued financial institutions would have a better chance at reshaping gun policy than gun control advocates would by directly lobbying lawmakers. He suggested advocates should pressure financial institutions to demand reform instead of calling for them to boycott the gun industry.

Money managers have a fiduciary responsibility to their clients, so they have to make a financial case to divest rather than one based on moral grounds, Sorkin said. Using embattled Remington Outdoor Company as an example, he explained the company has struggled to access capital markets or find a buyer since one of its products was the primary weapon used in the Sandy Hook school shooting in 2012.

Despite record setting gun sales nationwide during the entirety of the Obama Administration, Remington is preparing to file for bankruptcy protections this month. The company racked up nearly $1 billion in debt, so it is unlikely to be able to repay bondholders this year and next.

Remington is an example — albeit, an extreme one — of the gun industry’s current state. Although indicators for gun sales show only a slight difference from President Obama’s record setting final year, gun and ammo makers had prepared for surging sales leading up to 2016’s presidential election (and believing the U.S. would have an anti-gun president). So when pro-gun Republicans took the White House and both chambers of Congress, demand for guns fell. To work down surging inventories, gun companies had to lower and slash prices.

A national force led by students and victims of the shooting at Marjory Stoneman Douglas High School, which left 17 people dead and 15 others injured, encouraged a number of gun sellers to revise company policy. Dick’s Sporting Goods led the charge by announcing it would only sell guns to buyers older than 21 and ended the sale of “assault-style” weapons. Dick’s explained that it changed company policies because regulations in place would not have prevented the 19-year-old gunman from legally obtaining a firearm.

Still, even with the amounting threats, the gun industry has defended current standards and even challenged Dick’s policies, arguing the changes violate age discrimination laws and is an affront to the Second Amendment. Some have even taken to challenging the company’s new policy in court.

The activism by corporate America makes the response to the Parkland mass shooting different from the public’s response to other massacres. While it’s too early to determine the impact it has had on public policy, it is clear that proposed policy solutions mirror one another.

Lawmakers on both sides of the aisle and of different areas of government have supported measures to improve the background check system and to raise the age limit to buy long guns from 18 to 21. And, state lawmakers in Florida — nicknamed the “gunshine state” for its pro-gun policies — sent a sweeping gun control package to the governor’s desk this week.

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