Senate Banking Chair Warns Banks Against Targeting Gun Industry

'Business lending decisions should be based on creditworthiness, rather than politics or political pressure'

Chairman of the Senate Banking Committee Mike Crapo / Getty Images
April 1, 2019

The chairman of the Senate Banking Committee warned the banking industry on Thursday that it should not attempt to restrict legal gun sales by denying financial services to members of the gun industry.

Sen. Mike Crapo (R., Idaho) sent a letter to eight of the country's biggest banks detailing his concerns with the way some of them had begun rejecting business from certain gun companies. In the last year, several of them have attempted to restrict what kinds of guns can be sold to the public and who they can be sold to by applying financial pressure.

Bank of America announced last year it would deny services to companies that produce "military-style firearms." Around the same time, JP Morgan Chase said it would limit its business with gun companies. Citibank went further by declaring  it would not do business with any company that sells what they called "high capacity" magazines or that sells firearms to adults between the age of 18 and 21.

Wells Fargo has faced similar pressure from gun-control groups over the same period of time but has thus far bucked the trend and refused to deny business to gun companies.

Crapo said banks shouldn't try to limit legal businesses using their financial resources.

"Banks serve customers who are geographically and politically diverse, and it is wrong to use essential banking services as a way to choke off such services to lawful, creditworthy businesses," Crapo wrote in his letter. "Large banks, which receive significant forms of government support and benefits, should continue to provide credit and services to customers and companies that comply with federal and state law and should not seek to replace legislators and policymakers. Business lending decisions should be based on creditworthiness, rather than politics or political pressure."

Crapo's comments come on the heels of senators Kevin Cramer (R., N.D.) and John Kennedy (R., La.) introducing S821, the Freedom Financing Act. They said the legislation would keep banks with resources of $10 billion or more from denying business to gun companies.

"It's not a bank's job to create policy," Kennedy said in a statement. "They need to leave the policymaking to Congress. Banks should not be able to discriminate against lawful customers on the basis of social policy."

"A small number of banks controlling most of the financial sector could effectively illegalize legal commerce by refusing to finance certain industries or process certain transactions," Cramer said. "Look no further than pro-Second Amendment industries where such discrimination has already occurred. Big banks should not be the arbiters of constitutionality."

Crapo said banks should not take the politics of legal industries into account when deciding whether or not to do business with them and decried an Obama administration program which sought to limit the financial options for those in the gun and payday lending industries.

"Access to banking credit and services is vital for creating jobs and promoting a healthy economy," he wrote. "Banks were not chartered to manage social policy by limiting credit to politically disfavored industries or promoting credit to politically favored industries. During the Obama Administration, I fought against 'Operation Choke Point,' an initiative in which Federal agencies pressured banks to 'choke-off' politically disfavored industries’ access to payment systems and banking services. Operation Choke Point was inappropriate, and banks should send a clear signal that they will not restrict credit and services to politically disfavored industries."