Louisiana officials Thursday blocked banking giant JP Morgan Chase from participating in a bond refinancing deal, in Republicans' escalating effort to keep some large investment firms sidelined from state work because they limit business with firearm manufacturers.
The state Bond Commission unanimously chose Wells Fargo to refinance the $700 million borrowing debt to get the state a better interest rate and lower repayment cost, with the financial services company earning fees off the work.
JP Morgan Chase and Co. had initially offered a better deal. But Treasurer John Schroder and Attorney General Jeff Landry — both members of the Bond Commission — raised objections because of the company's policy regarding guns.
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"I'm not selling our 2nd Amendment rights to corporate America," said Schroder, a Republican eyeing a possible bid for governor in 2023 and commission chairman.
JP Morgan CEO Jamie Dimon testified before Congress that the investment banker doesn't do business with manufacturers of "military-style weapons for civilian use." But the company said its customers can use JP Morgan's financial products to buy those types of weapons.
Though Democratic Gov. John Bel Edwards' administration agreed to choose Wells Fargo for the refinancing work, the governor's top lawyer, Matthew Block, said it was poor policy to disqualify JP Morgan for a private business decision unrelated to the work in Louisiana.
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The refinancing of gas and fuel tax bonds is expected to save the state about $40 million. Wells Fargo lowered its fee rate to match what JP Morgan was offering, so the deal won't cost any more by choosing one over the other, according to Lela Folse, director of the Bond Commission.
But Block said sidelining JP Morgan and two other of the nation's largest banks in prior financing arrangements will lessen competition for such work in future deals and could cost the state more money because fewer investment firms will be competing.
"We're telling the world ... that three of the biggest banks to loan us money at a good rate of interest, we don't do want to do business with them. What we're going to end up with is Joe's Savings and Loan being the one that we have to deal with at the end of this," Block said.
"It will cost us more money in the long run," he said.
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The Bond Commission previously has refused to allow Citigroup and Bank of America to work as underwriters on an interstate highway financing deal because they had policies restricting gun sales and manufacturing by their commercial customers.
JP Morgan refused to comment on Thursday's Bond Commission decision.
Schroder said all three of the banking giants still could work on Louisiana borrowing deals that are competitively bid, even if they've been locked out of other types of financing deals.
He noted that lawmakers passed a bill to keep the companies from being eligible for the competitively bid contracts as well because they limit business with the firearm industry, but Edwards vetoed the measure. Texas has enacted a similar law.
Even though Schroder and Landry were on the same side of the gun issue, part of Thursday's discussion involved testy exchanges between the treasurer and the attorney general about the way Schroder's office handled the refinancing work. Landry is another potential GOP contender in the governor's race, so the pair could be running against each other in two years.
Landry said his office and others weren't kept in the loop about some of the refinancing conversations taking place behind the scenes. He accused Schroder of not being transparent about the process.
"These issues are being done in the dark," the attorney general said.
Schroder took that as complaints about his staff, defended his workers' performance and suggested Landry is largely absentee in his role on the Bond Commission, airing grievances on social media rather than talking with the officials involved.
"Don't come in here and take shots at the staff," Schroder told Landry.