A GOP-backed bill advancing through the Arizona legislature could restrict Wall Street’s work with local governments in the state, hurting the public-finance business at banks including JPMorgan Chase & Co.
House Bill 2473 passed the Arizona House of Representatives last week and is now under consideration in the Senate. It’s similar to a GOP law in Texas that took effect in September and upended a crucial market for municipal finance. Bank of America Corp., Goldman Sachs Group Inc. and JPMorgan have halted underwriting for Texas and its municipalities, and Citigroup Inc. resumed handling deals there after a pause of more than two months.
Banks are taking notice of the Arizona bill, as the GOP controls the legislature and the governor is Republican as well. The state is among at least eight, on top of Texas, where GOP lawmakers have introduced bills backed by the National Shooting Sports Foundation, a group that aims to punish Wall Street for what it sees as restrictive gun policies. Of that batch of states, Arizona’s measure is the only one to win approval in the legislature chamber where it was introduced.
“If these banks hit the pause button like they did in Texas, to make sure they are not out of compliance -- that may disturb the market,” said Paul Hickman, president of the Arizona Bankers Association. His group opposes the bill, saying it restricts the free market by dictating to private companies whom they can transact with.
Banks have been adopting gun policies in the wake of mass shootings in the U.S. JPMorgan Chief Executive Officer Jamie Dimon, for example, said last year that the bank won’t finance companies that make military-style weapons for consumers. A JPMorgan spokesperson declined to comment.
Democrats in Arizona have voiced opposition to it, and a spokesperson for Tempe said the city and other municipalities are working to amend the legislation.
“Regardless of where you stand on firearms, from a fiscal perspective this is bad for the government,” said Martín Quezada, a Democratic state senator. “It will result in less competition, higher costs, and risk the safety of our taxpayer money.”
The bill was introduced in January by Frank Carroll, a Republican state lawmaker, and it has about two-dozen Republican sponsors. Carroll didn’t respond to multiple requests for comment. The measure would apply to government contracts of $100,000 or more, hitting services like banking and debt underwriting.
Lawrence Keane, senior vice president for government affairs at the National Shooting Sports Foundation, said the group is optimistic about the bill’s prospects.
“We are confident that we can get the bill to the governors desk,” he said.
Granted, the Arizona muni market is much smaller than Texas’s, which at almost $50 billion last year was second only to California. Arizona issuers sold about $7.5 billion of munis in 2021, data compiled by Bloomberg show.