BofA’s Gun Dilemma Is Just the Start as Activist Pressure Mounts
(Bloomberg) -- Bank of America Corp.’s workers have seen mass shootings up close. One of its locations was just steps from a 2016 attack targeting Dallas police officers. And when newspapers profile the dead, company staff appear among the mourners.
The firm revealed last week that the number of employees directly affected by mass shootings over the years has topped 150, prompting the company to announce it will no longer finance makers of assault-style firearms sold to consumers. And with that, the second-largest U.S. bank crossed a line that big financial firms usually strain to avoid, taking a side in the nation’s many culture wars.
Such pressures are mounting: Across the country, activists are exerting unprecedented pressure on banks to wield power normally afforded to lawmakers. Groups, sometimes allied with shareholders, are demanding that the largest lenders use their financing clout to force action on guns, fossil fuels, equal pay for women, helping low-income families and climate change.
Some organizations say they’re targeting the financial industry because they can’t get traction with the Trump administration or the Republican-controlled Congress. Bank of America’s decision shows that, under certain circumstances, the big banks may budge.
Frustration with political gridlock has activists ratcheting up pressure on companies to take policy positions -- and to do so more frequently, according Nien-he Hsieh, a Harvard Business School professor who teaches first-year MBA students about leadership and corporate accountability. That’s uncomfortable for banks. “No matter what you do, you’ll be seen as coming down on the issue on one side or the other,” he said.
The scene has been playing out again and again in recent weeks at Wall Street’s annual shareholder meetings. The gatherings -- typically in April and May -- have long attracted a wide variety of protesters. And it’s normal for investors with small stakes to use their right to address management to champion causes, often personal in nature.
But this year, some groups are adding banks as major targets for the first time.
“We are seeing particular traction with that right now because of the backsliding that’s happening with our federal government,” said Ben Cushing, the leader of a Sierra Club campaign against fossil fuels and pipelines. “If I’m passionate about doing something on guns after everything that’s happened, and I don’t see my elected officials taking action, then who else can we turn to?”
This is the first year in recent memory the Sierra Club is appearing at shareholder meetings for some of the nation’s biggest banks, Cushing said. Goldman Sachs Group Inc. is set to hold its annual gathering Wednesday, followed by JPMorgan Chase & Co. and Morgan Stanley later in May.
Guns have become a particularly hot political torch this year, ignited by the high school shooting in Parkland, Florida, that spawned a broader movement and consumer boycotts of firms including FedEx Corp., Apple Inc. and Amazon.com Inc. Even entities known for political action on other issues, such as the Sierra Club, have devoted some of their organizing efforts to the gun debate.
Citigroup Inc., the nation’s third-largest lender, made one of the first pledges in the financial industry to change its stance on guns. The bank said in March it would stop retailers that are its customers from offering bump stocks and high-capacity magazines. Companies that use its services typically can’t sell guns to people younger than 21 or who haven’t passed background checks.
Wells Fargo, meanwhile, has resisted calls to reverse its decision to do business with gunmakers and the National Rifle Association, which counts the bank as its primary financial institution. Some protesters at its annual meeting held signs emblazoned with a skull and crisscrossed rifles that read: "Wells Fargo Bankrolls the NRA."
Inside the meeting, Chief Executive Officer Tim Sloan acknowledged that he declined to meet with the American Federation of Teachers, whose representatives had sought to discuss gun issues with him. The organization dropped the bank as a recommended mortgage lender soon afterward. Sloan told shareholders “gun violence is a very serious issue in this country,” but that Wells Fargo ultimately decided it doesn’t believe “it’s a good idea to allow banks to decide what products and services Americans buy.”
On the environmental front, protesters assailed both Sloan and Moynihan for helping to finance oil pipelines, including Dakota Access, Atlantic Coast and TransCanada Corp.’s Keystone XL. U.S. Bancorp faced more climate-change demonstrators earlier in the month, and Citigroup responded to a shareholder proposal asking for consideration of Native Americans when it funds pipelines by saying it has implemented a policy to assess impacts on those communities.
Sloan, whose firm is among the biggest bankers to oil and gas companies, contended with the most objections over pipelines. A farmer told him Wells Fargo is wrecking his soil. Activist Joye Braun, known for Standing Rock Sioux Tribe demonstrations that entangled Wells Fargo last year, said she wants the bank to stop making pipeline company investments. Sloan said the bank didn’t directly fund the Keystone XL project.
Bank of America, Wells Fargo and Citigroup declined to comment for this story. A Citigroup spokesman provided web links to the firearms policy the bank announced in March and its 2016 Global Citizenship Report, in which it discusses the Dakota Access Pipeline and acknowledges those opposed to the project. A Wells Fargo spokesman referred to a statement this month that commits more funding for sustainable businesses and projects.
Even when bank executives acquiesce to the loudest activists, it doesn’t always buy relief.
At Bank of America’s shareholder meeting, Moynihan was forced to defend his decision to cut off certain gunmakers from loans and other services. One investor remarked that it’s an "odd choice” for a bank to willfully give up money.
“This comes from our teammates saying we have to help,” Moynihan said April 25 near the firm’s Charlotte, North Carolina, headquarters. Workers were impacted by killings in Orlando, Las Vegas and other sites of mass casualties.
Later that night, Senate Banking Committee Chairman Mike Crapo weighed in, taking aim at Bank of America and Citigroup for retreating from gun companies.
“We should all be concerned if banks like yours seek to replace legislators and policymakers and attempt to manage social policy by limiting access to credit,” the Idaho Republican wrote in a letter to Citigroup CEO Mike Corbat. Banks “should not deny financial services to customers they disfavor.”
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