Mayor Rahm Emanuel’s plan to strip financial institutions whose clients allow unrestricted gun sales of their seats on the gravy train tied to city bond deals stalled Monday amid opposition from the banking industry.
The City Council’s Finance Committee postponed a final vote at the behest of Ben Jackson, vice-president of government relations for the Illinois Bankers Association.
Jackson argued that the mayor’s ordinance includes an “exceptionally broad definition” of both financial institutions and their customers, establishing an “impossible standard” for those institutions to follow and police.
“It would certainly be impossible for a financial institution to determine which customers across multiple lines of business throughout the country or even globally under this ordinance remain in compliance with such a policy,” Jackson said.
“This is especially true, given the ordinance’s expansive view of what encompasses a client of a bank.”
Jackson further argued that local governments “cannot regulate” the lending activity of “state and federally-chartered financial institutions.”
“If federal regulators were reprimanded for seeking to limit banks’ business lending activity, it is difficult to envision how a local government, having no regulatory jurisdiction, is entitled to take a similar action,” he said.
Ald. Edward Burke (14th), who joined Emanuel in co-sponsoring the ordinance, said he is “prepared to work with” the banking industry to establish a more reasonable standard.
But he said aldermen heard the same complaints when they adopted the MacBride Principles and severed ties to banks that do business with the Swiss government after Holocaust survivors accused Swiss banks of failing to relinquish money and valuables stolen from them.
The same complaints were also raised when banks were required to come clean about their past ties to slavery, the alderman said.
“Sometimes, these financial institutions overreact and it takes some time for them to realize that they can, indeed, be a part of the solution rather than a part of the problem,” Burke said.
As originally proposed by Emanuel and Burke, financial institutions doing business with the city would have been required to file affidavits verifying that their customers ban the sale of bump stocks and high-capacity magazines.
To remain eligible for city business, financial institutions’ clients would also need to ban the sale of firearms to customers under the age of 21 and those who fail to pass background checks.
Financial institutions that fail to adopt that so-called “Safe Guns Policy” would have been declared ineligible to do business of any kind with the city.
They could no longer serve as city depositories. Nor could they underwrite or participate in city bond issues, hold city contracts or engage in a host of other potentially-lucrative financial transactions.
In the wake of the Parkland high school massacre, Citigroup already has moved to impose those restrictions on its clients and customers. Dick’s Sporting Goods also stopped selling guns to customers under the age of 21.
At a time when Democrats are struggling to round up enough votes to override Gov. Bruce Rauner’s veto of a bill licensing state gun dealers, Emanuel has argued that it’s important for the city to flex its own muscle.
“When it comes to fighting for stronger, smarter gun laws Chicago is putting our money where our mouth is,” Emanuel was quoted as saying in a press release on the day the ordinance was introduced.
“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.”
City Hall’s leverage to impose its will on financial institutions is tied to the mountain of debt imposed on Chicago taxpayers.
In 2017, Chicago sold $2.8 billion in debt. That made it the third-largest borrower in the Midwest, according to data compiled by Thomson Reuters.
Emanuel’s plan to isolate sales tax revenue in a special fund and use it to refinance $3 billion in city debt added $744 million to debt mountain last year.
Also on Monday, the Finance Committee agreed to soften and postpone a ban on civilian use of body armor to allow news reporters and actors on the set to wear bulletproof vests. The date of the recently-approved ban was also pushed back by four months to give the Illinois General Assembly time to impose a statewide version.