Louisiana Gun Bill Risks Roiling Wall Street’s Muni Business

(Bloomberg) -- Louisiana could soon bar banks that “discriminate” against firearm entities from working on government contracts, after lawmakers advanced legislation that’s similar to a Texas statute that has whipsawed Wall Street firms’ public-finance work.

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State lawmakers passed Senate Bill 234 last week and sent the legislation to Republican Governor Jeff Landry’s office for signature. Under the legislation, any company into entering a public contract of $100,000 or more must provide a written verification that they do not have a “practice, policy, guidance, or directive” that would “discriminate” against firearm entities or trade groups.

If passed, it would add to the pressure campaign from GOP states against Wall Street. Texas enacted a similar law in 2021 targeting Corporate America’s firearm policies, and it has hurt some large banks’ public-finance business in the state.

A similar Louisiana proposal was vetoed in 2021 by former Governor John Bel Edwards, a Democrat. At the time, he said the bill would reduce competition on bond sales by blocking large banks from participating.

But now the state is led by Landry, a Republican who took office in January, who is likely to sign the proposal.

Landry has emphasized his pro-gun record. Last year, when he was Louisiana’s attorney general, he encouraged state officials to only hire banks in advance on bond deals if the firms share the state’s values. Landry said at the time that he didn’t want to put “money directly in the pockets of the banks who have policies contrary to our way of life.”

A spokesperson for Landry’s office didn’t respond to a request for comment.

Louisiana’s current attorney general, Republican Liz Murrill, would be tasked with enforcement. The measure would take effect on Aug. 1. It includes exceptions for contracts that don’t receive any qualifying bids.

Higher Costs

The state’s legislative fiscal office said in an analysis that the law could raise costs.

“Voluntarily or involuntarily removing companies that provide goods and services to the government sector from future bidding will likely result in less competition among remaining bidders,” according to the analysis, which is dated May 29. “In turn, this may result in a marginal but indeterminable increase in overall costs if the remaining bidders marginally increase bid rates with the knowledge that competition has been diminished.”

There will also be increased costs from the enforcement of the proposed legislation by the attorney general’s office, the analysis said.

The Institute for Legislative Action, the lobbying arm of the National Rifle Association, praised the advancement of the legislation, along with other bills concerning gun rights.

“We saw unprecedented movement this year to restore our rights and demonstrate that the Pelican State is committed to the fight to protect and preserve our firearm freedoms,” the group said in a statement on Tuesday.

GOP legislation targeting banks’ ESG policies is having an impact. Bank of America Corp. recently loosened restrictions on lending to the firearms and energy industries amid pressure from anti-ESG politicians in Texas and Florida.

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