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How laws against 'woke' banking, investing impact everyday people from school kids to retirees

A Citibank office is shown. (Mark Lennihan/AP)
A Citibank office is shown. (Mark Lennihan/AP)

Republican lawmakers have labeled Citigroup and Bank of America “woke,” and some have banned the companies from operating in their states. Both banks restrict lending to certain gunmakers and retailers.

Last year, Texas put Citigroup on a blacklist after it announced a new firearms policy following the shooting at Marjory Stoneman Douglas High School in Parkland, Florida. The policy requires new clients that sell guns to complete background checks on buyers.

More gun makers have operations in Texas than any other state. Two years ago, Republican Gov. Greg Abbott signed several pro-gun bills.

“Government is coming to take your guns,” Abbott said. “Texas will not let that happen.”

A new state law says that any bank found “discriminating” against the gun industry can not do certain business in Texas. Before the law went into effect, Citigroup had plans to help the small city of Anna, Texas borrow $99 million from bond investors.

Bryan Heath and his family live in Anna, a city just north of Dallas with a population of 20,000. Heath is a data systems technician who moved to Anna as a kid in the 1990s.

“The high school, the middle school and elementary [school] were all next to each other in the same lot,” Heath says. “When we first came here, there were no traffic lights. It was just one exit.”

Then came the subdivisions, chain restaurants and commuters that turned Anna into an outer suburb of Dallas.

The city planned to use Citigroup to borrow money for, among other things, upgrading its water and sewer systems. According to Heath, the water tastes “funny” and the system could use an update.

“We don’t drink it,” he says. “We choose to use water bottles instead for drinking water and for making coffee. We avoid cooking with it and drinking it.”

When Citigroup got booted from the state, the city of Anna had fewer choices of banks.

“Let’s say there are a few car dealerships in the city, and you’re going out to buy a car. The largest car dealership in town closes down,” says Daniel Garrett, assistant professor at Wharton Business School.

The city of Anna had to go with the second-best bid: a bank that charged higher interest payments. That higher interest means paying back $277,000 more over 25 years.

“I like to think about these things in terms of opportunity costs. What if we gave Anna, Texas an additional $277,000 today? What could they have spent that on,” Garrett asks. “Would this have gone to better sidewalks? A few extra law enforcement officers? Would this help the local library build out?”

Garrett took what was happening in Anna, Texas and considered what the financial impact would be if fewer choices meant higher interest rates across the state. Garrett and Federal Reserve economist Ivan Ivanov did the math. They figured out that statewide, Texans paid an extra $300 to 530 million in interest over eight months last year.

“A really brand-new modern high school runs about about $150 million,” Garrett says. “They could have built 2-3 brand new high schools in the state of Texas instead of passing this rule.”

As he sees it, these are the trade offs and hidden costs that laws against banks deemed “woke” have. And they’re hurting the people of Texas.

Will Hild, executive director of the group Consumers’ Research, has been a prominent voice in the conservative push against so-called “woke” investing. He says that when considering the increased borrowing costs, you also have to look at the deficit of large industries losing money because of bank policies.

“That study doesn’t consider the costs to local economies and the tax base, if the main industries of these states are being targeted, discriminated against, by these banks,” says Hild. “It’s one thing to look at increased borrowing costs. But if you don’t look at the other side of the ledger, which is, what does this do to the tax base of a school district, when they shut down the local coal plant?”

Here & Now reached out to the Republican co-sponsors of the Texas law and none of them agreed to an interview.

Similar laws are showing up in other states

Beyond Texas, several Republican-led states — including Florida, Kentucky, Louisiana, Missouri and Oklahoma — have similar laws. But in the last couple months, some lawmakers in Republican-majority states have been asking pointed questions.

Wyoming Republican state Rep. Bob Nicholas spoke at a February hearing to ban banks with restrictions on oil, firearms, mining or timber companies in the state. He has concerns.

“If we can’t work with several of our investment firms, I don’t think we can go through this without losing money, or losing the ability to get the best product for the best price for Wyoming,” Nicholas said.

While some wonder whether the best price is the most important thing, others consider the role of principles.

At the Wyoming hearing, Nephi Cole, director of government relations at the National Shooting Sports Foundation, spoke for firearms makers and sellers.

“It brings up a very challenging question, which is: What is a right worth?,” Cole asked. “What is the value to the people of the state of Wyoming of being able to exercise a right?”

A similar strategy is playing out in West Virginia where the state has blacklisted banks that refuse to lend money to its coal companies. West Virginia Treasurer Riley Moore explained the move on Fox Business.

“We’re not going to let them play games with our money,” Moore said.  “If they want to continue to play stupid games, then they can win stupid prizes like losing contracts with the state of West Virginia.”

Concerns about the future of Anna, Texas

Back in Anna, Texas, there’s no home volleyball court to offer, which means Aubrey Turner’s daughter plays every game on the road.

“They basically, honestly, get kind of squished every time,” Turner says. “It’s a hassle to be able to have a game. You have to drive 45 minutes. The games often start at eight in the morning.”

Turner worries that the city, now on the hook for higher interest payments, will have less money for things like gyms, libraries and pools.

“There are no public swimming pools, which causes a problem because there’s not a central place to meet to have a birthday party, or something like that,” Turner says.

In the end, she wonders if Anna, Texas will keep up with other cities it competes against to lure families, homeowners and small businesses.

State pensions caught in the middle

It’s not just taxpayers missing out on things like new schools or public facilities. Teachers, firefighters, police officers and state employees who have billions of dollars socked away in state pension plans are also caught in the middle of this political fight.

Many Republican state lawmakers want to pull pension funds out of Wall Street money managers who factor climate change risk into their investment strategies. Lawmakers claim it’s a political agenda. But the laws they’re creating against these strategies, or ESG — environmental, social and governance investing — could be costly.

In Indiana, the state pension manager said an anti-ESG proposal would limit choices so much that long-term returns would come in at least $6 billion lower. Similar warnings have come from Kansas and North Dakota.

Renaye Manley is a pension plan trustee for the Service Employees International Union, which represents service sector workers, primarily health care workers.

“For our public sector members, they don’t get social security,” Manley says. “Our average member’s pension is about $28,000 a year.”

Manley says if states ban ESG investing, which factors in climate change and gun violence, her members would struggle to retire. As she sees it, these are the victims of laws against “woke” banks.


Jill Ryan produced and edited this interview for broadcast with Catherine Welch. Welch also adapted it for the web.

This article was originally published on WBUR.org.

Copyright 2023 NPR. To see more, visit https://www.npr.org.