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WASHINGTON, July 6 (Reuters) - Republican-led states have unleashed a policy push to punish Wall Street for taking stances on gun control, climate change, diversity and other social issues, in a warning for companies that have waded in to fractious social debates.
Abortion rights are poised to be the next frontier.
This year there are at least 44 bills or new laws in 17 conservative-led states penalizing such company policies, compared with roughly a dozen such measures in 2021, according to a Reuters analysis of state legislative agendas, public documents and statements.
While some of the individual moves have been reported, the scale and speed at which such "anti-woke" state laws and policies are ballooning and the challenges they are creating for Wall Street companies is detailed here for the first time.
The Merriam-Webster dictionary defines "woke" as being aware of and actively attentive to issues of racial and social justice, but it is often used by conservatives to disparage progressive policies. The term has gained traction as America has become more politically polarized over issues from racial justice and LGBTQ rights to the environment and COVID-19 vaccines.
Reuters counted bills considered and state laws passed in 2021 and 2022, although some state officials are also using executive powers to punish Wall Street.
The growing restrictions show how America's culture wars are creating new risks for some of the most high-profile U.S. companies, forcing them to balance pressure from workers and investors to take stances on hot-button issues with potential backlash from conservative policymakers.
West Virginia and Arkansas this year, for example, stopped
using BlackRock Inc for certain services, due to its
climate stance, according to West Virginia's Republican
treasurer Riley Moore and Arkansas media reports.
In Texas, JPMorgan Chase & Co , Bank of America
and Goldman Sachs have been sidelined from the
municipal bond market due to laws passed last year barring firms
that "boycott" energy companies or "discriminate" against the
firearms industry from doing new business with the state.In many cases, the measures target a range of companies, restricting their ability to conduct state business. But
financial institutions have been primary targets due to the
pivotal roles they play in the economy and the early stances
many took on such issues as fossil fuel and firearms financing.Republicans say the policies of such companies deprive legitimate businesses of capital.
“They're using the power of their capital to push their ideas and ideology down onto the rest of us," said Moore. He
spearheaded a law, passed in March, refusing business to banks
that "boycott" fossil fuel companies and has rallied officials
from 16 other states to promise to adopt similar policies.
With several major financial companies stepping in to cover travel costs for employees seeking abortions after the Supreme
Court last month reversed federal abortion rights, the
Republican push to sanction Wall Street for "woke" stances is
likely to grow.Republican Texas lawmaker Briscoe Cain said he plans legislation to outlaw such coverage and prohibit companies that
provide it from receiving any Texas state business or contracts."No corporation doing business in Texas will be allowed to subsidize abortions or abortion travel in any manner," Cain told
Reuters in an email.NO BOYCOTTS
The new curbs will make it harder for financial firms to do a range of state business, from bond underwriting to managing
state funds, depository accounts and government credit cards,
according to interviews with more than a dozen industry sources,
bank lobbyists and lawyers.Such contracts can be worth several million dollars each, public procurement data shows.
JPMorgan, for example, underwrote $3.2 billion worth of Texas muni bonds last year, compared with $210 million so far
this year, Refinitiv data shows. Bank of America, which
underwrote $3.7 billion in Texas muni bonds last year, has done
none this year.Some smaller firms, including Ramirez & Co Inc and Loop Capital Markets, meanwhile, have jumped more than 10 places so
far this year in the Texas muni bond market bookrunner rankings,
based on deal values.To be sure, some Democratic-led states are also looking to tilt the scales. Washington state floated a "climate resiliency
fee" for institutions that fund fossil fuel projects. California
is considering a bill that would stop its pension plans, the
country's largest, from investing in fossil fuel companies.But states led by Democrats are not pursuing as many punitive measures, according to the review and sources.
"We're going to see a lot more of these statutes on one side of the coin or the other," said John Crossley, a partner at K&L
Gates who focuses on energy. "It’s going to make it more and
more difficult for people to operate in these markets."Spokespeople for the above financial firms declined to comment or did not respond to requests for comment.
Financial firms say they aim to provide comprehensive healthcare benefits. They also argue government restrictions
will drive up costs for Americans, and they dispute the
characterization of their policies as boycotts.BlackRock, the world's largest asset manager and a frequent target of Republican attacks, for example, has told Texas
officials that while it has joined various efforts to cut
greenhouse gas emissions, it supports fossil fuel companies.
"The economy and financial system are best served when banks of all sizes can make their own banking and lending decisions
about how to meet the needs of their communities based on their
business model and risk tolerance," said Joseph Pigg, senior
vice president at the American Bankers Association.
ANTI-WOKE PUSH
The review shows "anti-woke" measures are gaining ground not only in traditional conservative strongholds such as Texas and
Kentucky but also in so-called purple states - whose voters
swing Democratic or Republican - such as Arizona and Ohio.The issues such measures target are also mushrooming.
Guns and energy were the focus of the roughly dozen state laws and bills last year and of at least 30 legislative measures
this year.But this year there were also more than a dozen bills relating to social and other issues, including “divisive
concepts” like critical race theory – an academic theory that
racial bias is baked in to U.S. laws and institutions –
mandatory COVID-19 vaccines, or the use of "social credit
scores,” the Reuters analysis shows.The latter is a theory that companies may take into account an individual’s political leanings when providing and pricing
services.In April, for example, Florida made it illegal for companies to require training that might make staff feel "guilt" or
"anguish" because of past actions by members of the same race.
Unveiling the bill, Florida Governor Ron DeSantis flagged Bank
of America as one company conducting such "woke" training.A bank spokesman said the materials were offered to hundreds of companies by a nonprofit and were not part of the bank’s
training materials.While the measures reviewed do not target corporate abortion policies, Cain said he expected other Republican-led states to
pursue business restrictions on companies with such policies.WALL STREET DIVISIONS
The financial industry is struggling to repel the onslaught, the sources said. Its trade groups are mainly registered to
lobby the federal government, while state-based groups are not
always aligned with Wall Street companies' priorities.Moore, for example, said West Virginia's community banks supported his measures. The West Virginia Bankers Association
declined to comment. The Texas Bankers Association said the
group had not opposed the Texas curbs because its members were
not in "consensus."Wall Street's adversaries, on the other hand, are united.
Galvanized by what they say are efforts by Democrats in the federal government to push "woke" policies, oil and gas,
firearms and conservative groups, including the Texas Public
Policy Foundation and the National Shooting Sports Foundation
(NSSF), are successfully pushing such curbs, according to
industry sources and advocates.
"Banks should stay out of making policy choices," said Lawrence Keane, general counsel at the NSSF, which advocated for the Texas law targeting lenders' firearms policies.
The American Petroleum Institute, a major energy group, said it opposes discriminatory policies toward the industry.
Jason Isaac, a former Texas lawmaker who leads energy advocacy for the Texas Public Policy Foundation and helped craft the Texas fossil-fuel law, said he was discussing similar laws with other states, adding: "This woke political ideology will continue unless we get it in check."
