State Laws Restricting Banks WV is acting

My last post now FA’d was discussing the party doing this. I wont enter into the politics.

There are in some fossil fuel producing states laws restricting major investment banks from operating in the state if the bank is found to not be supporting the state’s fossil fuel industry.

West Virginia has now restricted five major banks from operating in WV based on this.

In the long run these restrictions will bring down the coal industry in WV. The industry needs the financing.

It is not that there are not other banks. It is that banks can not trust WV at this point. What happens in the law is when investment slows down the bank becomes restricted from operating.

WV is the first to act on these news fangled laws.

I believe we are fully permitted to discussed passed laws.

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Do I understand what you are saying?

WV has just passed a law preventing banks from operating in the state if they don’t support the state’s fossil fuel industry. ??

I’m not a lawyer, but that doesn’t sound legal to me. I wonder how long before the banks sue WV to repeal the law. If it’s even worth the trouble to do business in WV.

Did WV just cut off its nose to spite its face?

Wendy

2 Likes

Do I understand what you are saying? WV has just passed a law preventing banks from operating in the state if they don’t support the state’s fossil fuel industry?

No. It just says that the state won’t do business (state contracts) with banks that boycott coal companies. California, for example, has banned state-paid travel to states that have laws against transgender people from using certain bathrooms.

DB2

1 Like

Do I understand what you are saying?

WV has just passed a law preventing banks from operating in the state if they don’t support the state’s fossil fuel industry. ??

I’m not a lawyer, but that doesn’t sound legal to me. I wonder how long before the banks sue WV to repeal the law. If it’s even worth the trouble to do business in WV.

Did WV just cut off its nose to spite its face?

Yes, you understand correctly. This is the effect of the spread of states enacting “anti-woke” laws. I initially posted about the several companies that are offering employees financial assistance if they have to go out of state for an abortion, running afoul of the state governments. Then, I found this article.

states are targeting Wall Street with ‘anti-woke’ laws

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 … states penalizing such company policies,

https://www.reuters.com/world/us/how-republican-led-states-a…

We recently saw Disney’s special development district, that had been granted by Florida as an incentive for the construction of Disney World, revoked in retribution for the company opposing homophobic state policies.

Steve

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State banking departments are commissioned to issue licenses which allow “foreign” (in this case, not based in West Virginia) banks to open branches in the state. This is a “State’s Rights” thing. If they have deemed that it is not desirable to allow branches of banks which will not treat all West Virginia businesses equally when they ask for a loan, then they are well within their rights (agree with them or not) to refuse to grant those licenses.

Jeff

1 Like

State banking departments are commissioned to issue licenses which allow “foreign” (in this case, not based in West Virginia) banks to open branches in the state.

If they have deemed that it is not desirable to allow branches of banks which will not treat all West Virginia businesses equally when they ask for a loan

That is a fundamental conflict of interest by the state.

Business goes TO the “out of state” bank to request a loan. That has nothing to do with banking within the state. Actually, it contradicts the “banking within the state” desires of the state. BECAUSE the lenders are “out of state”, their policies regarding lending are what the wannabe-borrower needs to follow.

The FACT the wannabe-borrower ignores the lender’s lending policies means the lender should refuse to make those loans because the wannabe-borrower DOES NOT INTEND to follow the lender’s policies.

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Do I understand what you are saying? WV has just passed a law preventing banks from operating in the state if they don’t support the state’s fossil fuel industry?

Yes, you understand correctly.

Not so according to this article:

https://www.wtrf.com/west-virginia/west-virginia-bans-5-bank…
Treasurer Moore has determined that BlackRock Inc., Goldman Sachs Group Inc., JPMorgan Chase & Co., Morgan Stanley and Wells Fargo & Co. are engaged in boycotts of fossil fuel companies, according to a new state law, and are no longer eligible to enter into state banking contracts with his Office.

“As Treasurer, I have a duty to act in the best interests of the State’s Treasury and our people when choosing financial services for West Virginia,” Treasurer Moore said. “Any institution with policies aimed at weakening our energy industries, tax base and job market has a clear conflict of interest in handling taxpayer dollars.”

DB2

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You say, “No,” but the article you linked to reads like yes to me.

You say, “No,” but the article you linked to reads like yes to me.

Then please explain “no longer eligible to enter into state banking contracts with his Office.”

and “in handling taxpayer dollars”

and "West Virginia will no longer award state business to a group of banks including JPMorgan, Chase & Co. and Goldman Sachs Group Inc.
www.wsj.com/articles/west-virginia-penalizes-banks-including…

and “West Virginia announced Thursday morning that five major financial institutions, including Goldman Sachs and JPMorgan, will be barred from doing business with the state…”
http://sweatshirtprices.com/index.php/2022/07/28/west-virgin….

Note that it reads “with the state” not “within the state”.

DB2

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the article you linked to reads like yes to me.

I suggest you reread the article. It is talking about which banks can do business with the state treasurer to deal with the state’s money. It is not a ban on the listed banks doing business in the state with citizens or businesses.

—Peter

2 Likes

I suggest you reread the article. It is talking about which banks can do business with the state treasurer to deal with the state’s money. It is not a ban on the listed banks doing business in the state with citizens or businesses.

Correct. Similar situation in Texas, where offending banks are excluded from municipal bond auctions.

So, what is going on here? The state governments are discriminating against certain businesses, because of the business’ position regarding certain other private businesses. SCOTUS ruled that businesses are people and have “free speech” rights. Apparently, those “free speech” rights only extend to speech that conforms to dictate from the state capital.

Welcome to Shinyland.

Steve

6 Likes

The state governments are discriminating against certain businesses, because of the business’ position regarding certain other private businesses.

The West Virginia government is refusing to do business with companies offering ESG investments. Companies are offering ESG investments because some investors want ESG investments. The West Virginia government sees this as a threat to its coal industry, and so wants to limit investors’ choices.

— links —
West Virginia threatens to bar big banks, Blackrock over perceived fossil fuel boycotts, June 14, 2022
“The pushback is part of a broader controversy over environmental, social and corporate governance (ESG) issues, which the financial industry has been quick to embrace in response to investor demand while critics say it could limit credit to legal industries. West Virginia is one of several states, including Texas, to adopt or consider new laws aimed at punishing banks they believe to be discriminating against such industries via ESG policies.”
https://www.reuters.com/business/finance/west-virginia-threa…

ESG Investing Comes of Age
How religious conviction and changing public sentiment led to the rise of investing for values and what companies have done to keep up.
https://www.morningstar.com/features/esg-investing-history

A Broken Record: Flows for U.S. Sustainable Funds Again Reach New Heights, January 28, 2021
Net flows of $51 billion in 2020 were more than double the total for 2019 and nearly 10 times more than in 2018.
https://www.morningstar.com/articles/1019195/a-broken-record…

ESG Fund Assets Soared in 2021. They Still Have Room to Run, March 30, 2022
“U.S. ESG mutual fund and ETF assets soared to a record $400 billion in 2021, up 33% from $303 billion the year before. Yet despite the strong growth, market share remains at just 1.4% of total U.S. mutual fund and ETF assets, according to a new report.”
https://www.barrons.com/articles/esg-fund-assets-soared-in-2….

DB2,

The five banks can not do business in WV.

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My mistake

West Virginia said Thursday it would no longer award state business to JPMorgan Chase, Wells Fargo, Goldman Sachs, Morgan Stanley and asset manager BlackRock over the companies’ decisions to cut back on financing to coal companies.

Creepy getting in bed with them anyway.

Just for some financial perspective…

https://www.theguardian.com/commentisfree/2022/jul/27/lookin…

/snip
Since the Paris Agreement, the six largest US banks – Chase, Citi, Wells Fargo, Bank of America, Morgan Stanley and Goldman Sachs – have provided $1.4tn in financing to the fossil fuel industry.

/snip

... US banks have released a spate of climate promises, committing to achieve net zero by 2050 and reduce emissions by 2030. But the hard truth remains: Wall Street’s financing of coal, oil and gas was higher in 2021 than it was in 2016, the year after the Paris agreement was adopted. Last year alone, US banks provided $64bn in financing to the corporations most rapidly expanding their coal, oil and gas operations ....

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Since the Paris Agreement, the six largest US banks – Chase, Citi, Wells Fargo, Bank of America, Morgan Stanley and Goldman Sachs – have provided $1.4tn in financing to the fossil fuel industry.

Imagine the impact of the Ukraine war if they hadn’t done the financing.

DB2

How prescient of the banks.

How prescient of the banks.

Well, it doesn’t take a lot of prescience to realize the world needs a lot of fossil fuels and chemical feedstocks (and will for a long time).

DB2

Well, it doesn’t take a lot of prescience to realize the world needs a lot of fossil fuels and chemical feedstocks (and will for a long time).

Tru dat!

Which is why I buy (and hold) the stocks I do.

Desert (CVX, XOM, T, BNS, BKH, ED, ATGFF, NI, NWN, TRP, ENB, WRE, WGL, XEL, DUK, SO & KO) Dave

1 Like