The CEO of the country’s largest bank warned recent actions by Texas officials might make it more difficult for cities and counties to raise money for schools, hospitals, airports, roads, and other new projects.
When voters sign off on a major project through a bond election, officials then go to major banks to loan them money. New state laws ban cities and counties from doing business with companies that “boycott” the fossil fuel industry or “discriminate” against gunmakers.
In an October letter, Attorney General Ken Paxton’s office notified major companies JPMorgan Chase, Wells Fargo, Fidelity, TD Bank, and others the state was investigating whether they were violating one of those laws.
In general, the bank leaders argue they do not “boycott” companies for ideological reasons but make strategic business decisions for future investments with their customers' best interests in mind.
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Specifically, at a small business summit in Frisco, CEO of JPMorgan Chase, Jamie Dimon, warned the state action may discourage investment in the state and lead to higher interest rates and borrowing costs.
“We don’t discriminate or boycott anybody,” Dimon told Bloomberg. “We do make risk, legal, credit and reputational decisions, which is our legal right – and my obligation as chairman.”
Dimon argued the state runs the risk of ruining its pro-business reputation if it puts its thumb on the scale of the free market too much.
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Texas leaders have often touted their stature as a pro-business state.
“I think it’s a mistake to damage it even a little way,” said Dimon.
According to Bloomberg, local governments have received $51 billion in investment from major financial institutions. Paxton’s office signs off on the deals per state law.
“Some things they have to be very careful about is that their own cities, schools, hospitals all get funding from someone like us and you want that to continue,” Dimon told Bloomberg.
In a letter sent on October 17, the AG’s office notified the companies they are being investigated on whether they are members of the Net Zero Alliance or one of their affiliates. The Net Zero Banking Alliance is a group set up by the United Nations to invest in renewable energy projects with the goal of a “net-zero greenhouse gas emissions by 2050.” 130 banks are involved including JPMorgan Chase, according to the United Nations website.
The agreement represents only a segment of JPMorgan Chase’s investment in energy. The bank has financed hundreds of billions of dollars in oil and gas projects, many based in Texas.
NBC 5 requested a comment from the Attorney General's Office and has not yet heard back.
“The Office of the Attorney General will continue to vigorously enforce our laws that prevent taxpayer funds from going to companies whose ‘ESG’ policies harm Texans or key Texas industries,” Paxton wrote to WorldOil, “Companies who discriminate against firearms businesses and organizations, the oil and gas industry, or the nation of Israel will not enjoy the opportunity and privilege of winning public contracts in Texas.”
The stakes are high for the state and the companies. In 2022, the state took action against investment giant BlackRock and hundreds of investment funds over similar issues.
Last week, Texas Comptroller Glenn Hegar announced his office added five more companies banned from doing business with the state's retirement accounts. JPMorgan Chase is not one of them.
"Texas has been an unbelievable place to do business," Dimon told Bloomberg. "I urge them to be very careful to stay the welcoming place."
