It was only a matter of time.
Left-leaning states, particularly Illinois, have long been trying to strong-arm the financial sector into enforcing their social justice agenda. Now, more conservative states are responding by using the same tool. Nobody will end up winning. Blame those who started it.
Financial officers from 15 states sent a letter last week to the banking industry threatening to take “collective action” against banks that disfavor the fossil fuel industry. “We have a compelling government interest, when acting as participants in the financial services market on behalf of our respective states, to select financial institutions that are not engaged in tactics to harm the very people whose money they are handling,” the letter stated. West Virginia Treasurer Riley Moore, one of those signing, called it “woke capitalism.
On the opposite side, Illinois has long been at the forefront of threatening to pull funds from financial institutions that it doesn’t like for political reasons, particularly in the office of Treasurer Michael Frerichs. The state’s message, often conveyed jointly with left-leaning states, has been that financial institutions better get in line with the left’s social justice goals, including opposition to fossil fuels, or expect no business from them.
We have documented that misguided effort by Illinois extensively. Read the columns listed below. In fact, the most recent effort by Democrats was a threatening letter much like the new one by Republicans, sent to much the same list of big financial institutions. Specifically, Illinois Treasurer Michael Frerichs and a group of 29 other state financial officials earlier this year sent a letter to six of the nation’s largest private sector money managers in a transparently partisan attempt to bully them out of supporting Republicans.
Nobody should be surprised that Republican states are responding in-kind. Their retaliation is entirely appropriate as a counterbalance, but the unfortunate net result is a race to the bottom in which taxpayers suffer.
Taxpayers’ money should be invested to maximize returns. Period, full stop. Distorting that goal with the political passions de jeur is a quagmire. Banks receiving the letter now face conflicting demands. States like Illinois and financial officials like Frerichs should have seen this coming. Moreover, they should know that their opponents, Republicans, dominate far more state governments than Democrats, so the end result of this tit-for-tat won’t be to their liking.