Citigroup, one of the largest underwriters in Texas, has declared it is ready to resume business in the state under a law designed to protect the firearms industry and its advocates.
In a letter to the state attorney general, Daniel Tomson and Paul Creedon, co-heads of public finance for Citi, assert that their firm does not discriminate against any firm involved in making or selling firearms or any associations or nonprofits related to the industry.
The same letter also states that the banker does not discriminate against Israel or the oil industry, as required by previous state laws. In a brief statement, Citi explained the bank’s position.
“In October, we elected not to engage in primary market underwriting activity with public sector clients in Texas temporarily while we were working through the certification process, which included submitting a standing letter to the Office of the Attorney General,” Citi said. “Having made the certifications required by the new law, we are now prepared to resume serving issuer clients in Texas.”
Sponsors of Texas Senate Bill 19 identified Citigroup, JPMorgan Chase, Bank of America and Wells Fargo as targets of the legislation when it was debated in April. Goldman Sachs also withdrew from a recent Texas bond deal, citing the uncertainty around SB 19.
Texas Republicans, who rally around the weapons industry, drew a bead on Citi in 2018 when it said it would prohibit retailers that are customers of the bank from offering bump stocks or selling guns to people who haven’t passed a background check or are younger than 21.
Under SB 19, companies have to provide written verification that they comply with the terms of the law.
A Sept. 3 letter from Citi’s bond counsel Greenberg Traurig, warned the law may violate the First Amendment, according to Bloomberg News.
“We are also concerned that Senate Bill 19 may impair First Amendment rights of freedom of speech, assembly, and association,” Dale Wainwright, co-chair of Greenberg Traurig’s national appeals and legal issues group and chair of the Texas appellate practice, wrote in the letter. “Barring engagements or refusing to approve a bond issuance when a company’s contract verification is compliant with the statute may raise such concern.”
The attorney general’s office replied that banks should provide a letter making an “unqualified verification” that they comply and that they can’t use language detailing what the company understands the law to require.
So far, Texas Attorney General Ken Paxton has made no move to politicize the law, though industry officials are worried the issue might become a political football in a tough re-election campaign.
Paxton is facing a primary against Texas Land Commissioner George P. Bush, nephew of the former President George W. Bush and son of former Florida Gov. Jeb Bush. U.S. Rep. Louie Gohmert, R-Lufkin, is also considering entering in the race, according to recent reports.
Paxton, who has been under indictment for alleged securities violations his entire first term, has allied closely with former President Donald Trump and has filed several lawsuits against the federal government.
