Wells Fargo Is Cleared to Underwrite Texas Muni-Bond Deals by AG

Gun Rights

(Bloomberg) — The Texas Attorney General’s Office ruled that Wells Fargo & Co. can continue underwriting municipal-bond transactions in the state after probing the bank’s policies on the firearms industry.

It’s a win for Wells Fargo’s public finance department, allowing it to maintain its presence in the top market for municipal-bond deals this year. The San Francisco-based bank is the sixth-biggest underwriter in the US muni market overall. 

Leslie Brock, the chief of the AG’s public finance division, wrote in a letter to bond counsel on Friday that the bank complies with the rules.

“We have not been able to determine that Wells Fargo has a policy or practice that discriminates against a firearm entity or firearm trade association,” the letter said. “Our review of this matter is now closed.”

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The Texas Republicans who control state government made bond underwriting into a political issue with a 2021 law that requires banks seeking to do business in that arena to verify they don’t “discriminate” against the firearm industry. The Attorney General’s Office determined Citigroup Inc. was in violation earlier this year, effectively banning the bank amid the Lone Star State’s fight with Wall Street over its environmental, social and governance policies.

State officials had sent a letter in late July to lawyers who work on bond deals in Texas, saying that its officials were studying Wells Fargo’s policies tied to the gun industry.

A spokesperson for Wells Fargo declined to comment on the AG’s decision.

The bank has always maintained that it complies with the law. Wells Fargo is the 17th-biggest underwriter in Texas, down three slots from last year, according to data compiled by Bloomberg. Issuers in the state have sold about $45 billion of municipal bonds in 2023, more than any other state so far this year, and Wells Fargo recently hired industry veteran Blaine Brunson from Morgan Stanley to focus on Texas sales. 

Wells Fargo had previously been seen as a gun-friendly bank, and has worked with the National Rifle Association in the past. In 2021, though, Chief Executive Officer Charles Scharf told a Congressional committee that the bank was ending its relationship with the NRA.

©2023 Bloomberg L.P.

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