Does Underwriter Reputation Matter in the Municipal Bond Market Review
The nation'due south largest underwriters of municipal bonds will presently brainstorm operating under a Texas law that bans them from land contracts if their policies are said to discriminate against the firearms industry.
Senate Nib xix, ane of several pro-gun pieces of legislation signed into law by Gov. Greg Abbott, takes event Sept. ane.
The law prevents any visitor from receiving contracts from the land or other authorities agencies valued at $100,000 or more "unless the company verifies in writing that it does not accept an internal policy or directive that discriminates confronting members of the lawful firearm or armament industries."
Bloomberg News
Republican sponsors said in their analysis of SB nineteen that it was necessary to "ensure that whatsoever company in Texas with a policy that attempts to restrict gun or ammunition sales volition not be allowed to benefit from tax dollars through state contracts."
Some in the municipal bail industry fright that the measure could exist exploited in a fraught twelvemonth of political campaigns.
"The concern is that bonds of Texas have to exist approved by the attorney full general'due south office," said Kevin Twining, co-chair of Locke Lord's public finance group in Dallas. "The law requires the firms to make a representation that they practice not discriminate against the firearms manufacture.
"Our concern — issuers, bond counsel or others — is that nosotros can make that representation, but the AG may not approve of it. They tin say: 'We're not going to corroborate.' Then you've got a failed bail proposal and you take to break a lot of contracts."
Fifty-fifty as gun deaths and massacres take multiplied, Republicans in Texas have touted their affiliation with gun rights advocates, dropping legal barriers to weaponry.
Texas Attorney Full general Ken Paxton, who has been under indictment for securities fraud his entire first term, is facing a GOP primary challenge from Country Commissioner George P. Bush-league, nephew of sometime president and Texas governor George W. Bush-league and son of former Florida Gov. Jeb Bush.
Paxton has closely allied himself with the firearms industry, joining attorneys general in 13 other states in a legal challenge to a federal law banning and so-chosen "bump stocks" on weapons similar those used in the 2017 Las Vegas concert massacre that killed 60 and wounded 411. The "crash-land stocks" allowed the semi-automatic weapons to fire more rapidly from the sniper'southward lair in the Mandalay Bay resort.
Paxton has frequently joined lawsuits against other states, including California, New York and New Jersey, that sought to limit access to so-called "attack rifles."
"States do non take the right to dictate what is 'necessary' or 'unnecessary' when it comes to constitutional rights, and demonizing certain rifles that are widely used nationwide is an infringement on the 2nd Amendment," Paxton said in a argument involving ane of the lawsuits.
Paxton'southward office did not reply to calls and emails seeking comment on any actions he plans to take regarding SB 19.
Texas Comptroller Glenn Hegar noted in a statement this summer that SB xix applied non just to the underwriters but their counterparties, as well.
"The new contract provision will require prospective counterparties to verify that they do not have a policy (written or otherwise) that discriminates against an entity based on its status as a firearm entity or an association thereof and that it volition not discriminate against such an entity during the term of the contract," Hegar wrote. "If banks (or other entities) do in fact maintain such a policy it will likely exist difficult for them to sign off on such a contract in the future."
During the legislative debate, the major banks, including those specifically targeted for limiting business organisation with the firearms industry, maintained a low contour. One manufacture executive said the banks appeared reluctant to antechamber against the bill for fear of further targeting.
JPMorgan and Bank of America, ii of the lenders cited in House debate as discriminating against the weapons manufacture, declined comment on enactment of the legislation.
Citi, another lender cited in the flooring debate, defended its history of business with Texas governments dating to the 1870s and involving billions of dollars of public finance.
"We take determined that the legislation doesn't prevent us from serving our clients in Texas, as our policy does not restrict united states of america from working with retailers because they sell firearms," the bank said in a statement. "It simply requires our clients to use all-time practices when selling firearms. We have continued to serve retail sector clients that sell firearms, including those in Texas, who use these responsible practices."
Another hurdle state-issued bonds must clear is the Texas Bail Review Board chaired by Gov. Greg Abbott, with Lt. Gov. Dan Patrick, Hegar and Business firm Speaker Dade Phelan as lath members. All are Republicans, with Abbott and Paxton as loud advocates for gun rights.
Hegar, who relies on the major banks for underwriting billions of dollars of annual acquirement anticipation notes and other investments, recently took a shot at another corporation nether the guise of protecting Israel.
But as with the nib protecting the gun industry, Texas lawmakers in 2017 passed a bill forbidding business with a company that refused to pledge that information technology would not boycott Israel.
A federal court alleged the police unconstitutional, leading to a narrower definition of those who were required to obey the pledge.
On July 22, Hegar cited the constabulary in announcing a possible blacklisting of the ice cream purveyor Ben & Jerry'southward and its parent company Unilever for policies that Israel considered discriminatory. The ice cream maker announced that information technology would stop selling products in Palestinian territories occupied by Israel.
Affiliate 808 of the Texas Authorities Code defines "boycott Israel" as "refusing to deal with, terminating concern activities with, or otherwise taking any action that is intended to penalize, inflict economic harm on or limit commercial relations specifically with State of israel or with a person or entity doing business in Israel or an Israeli-controlled territory."
"As with any of our listing decisions, my function, in cooperation with our research providers, will advisedly review statements and actions made past Ben & Jerry's and Unilever to plant if either entity is a suitable candidate for the Texas list," Hegar said.
"Texans have made it very clear that they stand with Israel and its people," Hegar said in the printing release that included a pitch for Brenham, Texas-based Bluish Bell Ice Foam.
Hegar'due south office said that the comptroller has not received whatsoever entrada contributions from Blue Bell. Spokesman Chris Bryan said Hegar plans to enforce SB 19 as a matter of police force.
"This is not a campaign issue," Bryan said.
"The comptroller is and will proceed to exist a very strong advocate of 2nd amendment rights in Texas and he enjoys spending fourth dimension with his family in the outdoors," Bryan said. "He has conspicuously stated that his office will implement SB 19 equally passed by the Texas Legislature."
In debate over SB 19 in the Texas Firm, sponsor Rep. Giovanni Capriglione, R-Keller, said that corporations such every bit the banks do not have civil rights, an assertion that brought strong pushback from Democrats.
With Democrats standing with the banks and Republicans opposing corporations, the two parties experienced an odd form of office reversal.
In the by, Texas has made business recruitment its prime objective. Merely in recent years, Republicans have croaky downwards on business practices that appear to protect public health, safety or environmental concerns.
In this year'due south ranking of states most favorable for business organization past business news network CNBC, Texas slipped to 4th place from 2nd in the previous 2019 ranking.
"While it's never expert for Texas to autumn, the state still ranked very well on the measures that are most closely related to electric current and potential business organisation conditions (including ranking starting time in workforce)," Texas economist Ray Perryman, principal of The Perryman Group, told The Bond Heir-apparent via email. "I do not retrieve the CNBC analysis has any direct begetting on the bond event."
"Obviously, a bill which dramatically reduces the available options for financing governmental needs is a not a wise selection," he added.
One potential complication involves the bordering nation of Mexico which last week sued American gun-makers and distributors in U.S. federal court in Massachusetts for damages caused past illicit firearms.
The lawsuit aims to "make the defendant companies compensate the government of United mexican states for the harm caused past their negligent practices," said Foreign Secretary Marcelo Ebrard. The Mexican regime estimates $10 billion in damages from economic loss.
Texas shares acquirement with United mexican states on a number of projects forth the border, including bridges and waterways.
Advocates for victims of gun violence, who generally receive lilliputian attention in Texas, sought to put the issue in a unlike perspective during debate over SB nineteen and later on.
"Information technology is tragic that Texas elected leaders ignored the many gun injuries and deaths beyond Texas in the 2021 regular legislative session and fabricated it easier for people to access and carry guns," said Gyl Switzer, managing director of the advocacy grouping Gun Sense, on the second anniversary of the El Paso massacre that killed 23 and wounded 23.
"We must practise better for victims, survivors, communities, and all Texans."
Iv of the 10 most deadly mass shootings in U.Southward. history were in Texas.
Texas Gun Rights and other pro-gun organizations praised the loosening of gun laws every bit a major civil rights victory.
Source: https://www.bondbuyer.com/news/municipal-bond-underwriters-face-pro-gun-test-in-texas
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