Louisiana Treasurer John Fleming is pictured arriving at Trump Tower in New York City a Dec. 12, 2016, photo, when he was a member of then President-elect Donald Trump's transition team. (Drew Angerer/Getty Images)
Louisiana Treasurer John Fleming has recommended the state not work with Bank of America as a fiscal agent because of the financial institution’s environmental, social and governance principles. Conservatives have opposed such ESG standards, arguing they’re a form of corporate discrimination.
“This decision was not entered into lightly but was made because there is evidence that Bank of America is deliberately denying banking services to customers and potential customers (de-banking) of religious organizations, gun manufacturers, fossil fuel producers and others based simply on their political perspectives and activities, not because of any bank policy or law violations,” Fleming said in an Aug. 12 news release .
There’s a question about whether this recommendation has any practical effect – but more on that later.
What we do know is the treasurer’s statement excludes important context Bank of America provided him and Republican financial officials from 12 other states three months ago. This selective omission suggests Fleming is more interested in letting political factors steer Louisiana’s fiscal policy rather than pertinent business information.
When qualified bidders are removed from a competitive bid process, that can only drive up the state’s cost of borrowing money.
– Jan Moller, Invest in Louisiana
Bank of America shared those facts with Fleming and other leaders in response to a letter they had sent to the financial institution in April. In it, the elected officials condemned the bank’s ESG principles, which Fleming said amounted to the bank “adopting a left-wing agenda.”
“This is also a case of a major bank using its financial power to punish conservatives and religious customers,” Fleming wrote.
In its response to Fleming and his peers, Bank of America noted it has “banking and investing relationships with approximately 120,000 faith-based clients in the United States.”
“Neither religion nor political views are a factor in any account closing decision,” Bank of America spokesman Bill Haldin said last week in an interview.
Citing 2023 data, the bank reported nearly $6 million in employee-directed funding in matching grants to religious-affiliated nonprofits. Bank of America employees also put in close to 250,000 volunteer hours with faith-based groups last year.
Fleming had also chided the bank for closing the account of Indigenous Advance Ministries, which the treasurer identified as “a Christian organization that assists at-risk children, prisoners, and sex trafficking victims in Uganda.”
What he neglected to mention was that the ministries’ Uganda operation involves a call center that specializes in debt collection. Bank of America’s U.S. small business division does not provide services to organizations that perform debt collection. The bank also doesn’t do business in Uganda, Haldin said.
Fleming also panned Bank of America for closing the account of the Timothy Two Project International, which he said trains pastors in more than 65 countries. What the treasurer didn’t mention was that he had been informed Timothy Two’s projects include one in Cuba, where the bank cannot conduct business because U.S. Treasury sanctions against the country forbid it.
These all seem like important facts for a treasurer to take into account before accusing a global financial institution of being punitive with its customers.
Along with these facts, Fleming’s stance also disregards fiscal prudence. It potentially comes at the public’s expense in the form of higher interest rates when the state borrows money for major construction because there would be less competition for Louisiana’s borrowing business.
“ This looks like political posturing that could come at a cost to low- and moderate-income families,” said Jan Moller, head of Invest in Louisiana, a policy think tank that operates in the interest of a more inclusive state economy.
“When qualified bidders are removed from a competitive bid process, that can only drive up the state’s cost of borrowing money,” he said. “When the cost of borrowing goes up, that leaves fewer resources for education, health care, workforce training and other programs that Louisiana families depend on.”
Moller also stressed that Louisiana faces a “serious fiscal cliff” next year when a 0.45% portion of the state sales tax will expire. The GOP supermajority in the Legislature is unlikely to renew it, leaving a revenue gap between $339 million and $559 million.
Stances like Fleming has taken against Bank of America will only make it harder to craft a balanced budget that protects critical programs, Moller said.
Back on that question of whether Fleming’s recommendation has any actual effect. After all, it’s just a recommendation, and it wouldn’t exclude Bank of America from participating in competitive bids for the state’s bond business.
As chairman of the State Bond Commission, Fleming and like-minded members could oppose working with the bank on deals that can be negotiated. But based on our understanding of state law, Bank of America could still get Louisiana’s business if it’s the low bidder.
Fleming was asked to clarify his stance multiple times last week. Spokesman Jeff Croure acknowledged receipt of those questions but did not provide any responses from his boss.
It’s worth mentioning that more than three-quarters of Fortune 500 companies require their executives to meet at least one ESG goal as part of their financial compensation plans. So if Fleming is going to restrict Louisiana’s investments and dealings with such businesses, it feels like he’s bucking a trend at the risk of marooning the state on an island of financial limitations.
Let’s hope that operating in an informational void doesn’t become a habit for the treasurer. If that’s the case, it could get expensive for Louisiana.
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