CHICAGO – Chicago is threatening to ban financial institutions that don't require business clients to adhere to certain restrictions on gun sales from participating in city bond deals.
The “Safe Guns Policy” ordinance introduced last week by Mayor Rahm Emanuel and Finance Committee chairman Edward Burke will receive a hearing this spring. With Emanuel and Burke’s backing and heightened attention on Chicago crime rates and renewed efforts on gun control measures in the state legislature in the aftermath of the Parkland, Florida school massacre, it’s expected to easily pass.
The ordinance would require financial institutions to file an affidavit along with its economic disclosure forms verifying that their business clients adhere to policies that include banning the sale of "bump stock" attachments that allow semiautomatic rifles to fire faster, barring the sale of high capacity magazines, and banning the sale of firearms to persons under 21 or to those who have not passed a background check.
“The private sector has a role to play in supporting public safety. Chicago should give our business to companies who share our values and want to be part of the solution to gun violence, not profit from it,” Emanuel said in a statement.
“No financial institution shall be eligible to do business with the city….or be awarded a contract with the city, or any renewal or extension thereof, if the financial institution has not adopted a safe gun sales policy applicable to its retailer clients, partners, or customers. A safe gun sales policy shall be a requirement of all City of Chicago employee pension plan investment policies,” the proposed ordinance says.
The ban would apply to a firm’s eligibility to work with the city as a “city depository, underwrite municipal bond issues, or engage in a myriad of other financial transactions unless they file such an affidavit,” the city’s statement says.
Chicago cited Citi’s adoption last month of a policy requiring some of its clients and customers to adhere to stricter gun control policies identical to those outlined in Chicago’s ordinance.
“If Citigroup can adopt this policy, then all banks that wish to business with the city of Chicago should follow suit,” Burke said. “Given the Chicago City Council’s long and extensive history of taking stands on issues or moral principle by leveraging the procurement process, I believe that my colleagues can feel comfortable approving this measure.”
Burke was referring to past rules imposed on businesses including the 1990 Anti-Apartheid Ordinance that imposed a financial penalty on companies seeking to do business with Chicago that maintained business ties with South Africa and a later ordinance that required firms seeking bond and other business to disclose their historical ties to slavery.
The ordinance would become effective 90 days after passage and publication.
Refusal to adhere to the policy could prove costly for some underwriters. The city was the third largest Midwestern borrower last year, selling $2.8 billion of debt, according to 2017 data from Thomson Reuters. Chicago’s special purpose entity, the Sales Tax Securitization Corp., additionally sold $744 million.
Representatives of top Chicago underwriters including Bank of America Merrill Lynch, Goldman Sachs, JPMorgan, Morgan Stanley, and Stifel declined to comment on the proposed ordinance.
Citi became the first major bank to unveil a formal policy on gun control after the Feb. 14 shooting at Marjory Stoneman Douglas High School in Parkland, Florida that claimed 17 lives.
Burke heaped praise on the firm during a committee hearing last month on the Emanuel administration’s request for $4 billion in O’Hare International Airport borrowing.
Citi’s policy requires “new retail sector clients or partners to adhere to these best practices” on the age and background checks, bump stocks and high-capacity magazines. Existing clients are being informed of the new policies and the bank will work to “transition” their business elsewhere if they decline to comply.
“This policy will apply across the firm, including to small business, commercial and institutional clients, as well as credit card partners, whether co-brand or private label,” Ed Skyler, executive vice president in global public affairs at Citi, wrote in a March 22 blog post.
The proposed ordinance defines “financial institution” to include banks, savings and loan associations, thrifts, credit unions, mortgage bankers, trust companies, savings banks, investment banks, securities brokers, municipal securities brokers, securities dealers, municipal securities dealers, securities underwriters, municipal securities underwriters, etc.
A “retailer client, partner, or customer" is defined as any natural person or business entity that offers for sale at retail firearms, assault weapons, ammunition, or high capacity magazines and who offers credit cards backed by the financial institution, borrows money, raises capital, or uses banking services through the financial institution.