Muni Impact | January 24, 2023

Market hypocrisy, political opportunism, and the common good

Eric Glass

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Guest Author

Eric Glass

The attorney general of Texas earlier this month accused Citigroup of running afoul of a state law that “bars most government contracts with companies that engage in anti-gun business practices.” As a result, Citigroup lost the right to bid on and participate in the underwriting of municipal bond deals in Texas. 

I’m not arguing for or against states’ rights, nor am I interested in injecting myself into the culture war of wokeness and ESG (which, for the love of God, is merely a risk-mitigation tool). I’m here to uplift general market principles which enable any individual or corporate entity to evaluate risk and return of any investment and act accordingly.

Whether one individual or political party approves or disapproves, I assume Citigroup has conducted a rigorous quantitative and qualitative analysis and concluded that it is in their organization’s best interests and the best interests of their stakeholders to refrain from supporting the gun industry. 

Ultimately, that is an investment decision and only time will determine whether there will be a positive or negative return. This is the definition of market dynamics and capitalism in action, the very principles that every prominent politician in each and every U.S. state espouses (with the possible exception of Bernie Sanders). Confusingly, it seems apparent that certain states’ leaders promote capitalism only when it suits political ends. 

ESG boycott costs

If Texas wants to ban Citigroup from participating in in-state municipal underwriting, that is certainly their right to do so. However, who does that decision ultimately punish? Taxpayers – the very constituents that politicians swear to protect and center. 

By banning various banks, states squash competition, which is yet another foundational tenet of free market and capitalist philosophy, and raise the cost of capital to Texas and its localities. A paper published in June 2022, “Gas, Guns, and Governments: Financial Costs of Anti-ESG Policies” concluded that ”Texas issuers will incur $300-$500 million in additional interest on the $31.8 billion borrowed during the first eight months following enactment.” 

And gun violence continues ad-infinitum with devastating human, community, economic and financial consequences. Texas Attorney General Ken Paxton fiddles while Dallas, Houston, Austin, Fort Worth and El Paso burn. Relative to all other US states, Texas ranks 50th in percent of population uninsured, 45th in overall child well-being, 42nd in public school expenditure per student, as well as having the 10th highest incarceration rate. Every dollar lost is a dollar not allocated to the people of Texas. Can Texas afford higher fees and interest costs on their debt? 

States like Texas, Louisiana, Florida, and Arizona have sanctioned and threatened to penalize financial institutions with the loss of business (and corresponding lucrative fees) if they speak out against or restrict investment over issues like gun control or “Don’t Say Gay” legislation. Ignoring the display of inhumanity and cruelty in such actions, these states are actively seeking to dictate, manipulate, and coerce corporate behavior. Why are the devotees of neoliberal orthodoxy like the Business Roundtable or the US Chamber of Commerce not raising explicit objections? 


Though I don’t write the following words with any degree of confidence that the spirit of the message will be heard and considered, my direct plea to Citigroup’s Jane Fraser and every capital market CEO is the following: Let’s collectively agree (buyer and seller alike) to strengthen our resolve in the face of myopic, inhumane and craven political opportunism. 

Let’s agree to center regenerative investment in our communities rather than continue to sow the seeds of its demise for the sake of top decile performance and/or securing our ranking at the top of the latest league tables. 

Over the next 25 years, an estimated $70 trillion transfer of wealth among individuals will occur in the United States alone. Those beneficiaries – your clients, investors and employees – will not countenance making money and supporting organizations, corporations, and states that exploit the suffering, pain, and brutalization of others. 

We are at a crossroads and tipping point around climate change, environmental and racial justice, and basic safety. The threats, outcries, divestments, and suspensions are mere political distractions to the equity and existential challenges we face. There is no longer any time to fritter and waste. 

Though I prefer the term “rebellion,” to quote the Rev. Dr. Martin Luther King Jr.: “A riot is the language of the unheard.” 

Eric Glass is an impact investor and advisor to Justice Capital.