When Bank of America announced its decision to stop lending to companies that make AR-pattern rifles, it wasn’t clear how the policy would affect the firearms industry. Now we know more, and it doesn’t look promising.
Reuters reported earlier this week that Bank of America had contributed $43.2 million to a $193 million lending package designed to help Remington recover after emerging from bankruptcy. BoA struck the deal with Big Green before changing its firearms policy, but that didn’t stop David “Boycott Everything” Hogg from criticizing the bank for honoring its commitment.
— David Hogg (@davidhogg111) May 7, 2018
Now a new Reuters report indicates that the bank might be caving to the high schooler’s pressure. Vice Chairman Anne Finucane said in a letter that “Remington is aware of the policy that we subsequently announced, and that policy will dictate our future actions after the bankruptcy proceedings conclude.”
“Let me be clear,” she continued, “we are not changing our policy to end financing of the manufacture of these military style firearms.”
Reuters notes that while BoA is unlikely to pull out of the deal for fear of legal action, they could sell their participation once Remington exits bankruptcy.
A more troubling scenario is buried at the bottom of Reuters’ original report. One corporate restructuring specialist suggested BoA could have used the new credit facility as leverage to demand that Remington stop making AR-pattern rifles.
“It’s perfectly reasonable for them to say to any borrower, ‘We’re happy to lend to you if you don’t make military-style assault weapons,’” said Ted Gavin of the Gavin/Solmonese LLC restructuring advisory firm. “The lender has all the power.”
It is unclear whether they will seek to use that power to advance Hogg’s agenda or sell their participation to another bank. Whatever they decide, their anti-gun stance poses a legitimate existential threat to the firearms industry. If other banks choose to follow BoA’s lead, gun manufacturers could be forced to choose between staying in business and making AR-pattern rifles.
Not all BoA’s shareholders are taking the new policy lying down, however. Conservative activist Justin Danhof pointed out at a recent shareholder’s meeting that the bank has an obligation to its investors to make profitable loans.
“The company is willfully giving up money,” Danhof said of the guns pledge.
Danhof puts his finger on the silver lining of this debacle: when banks discover that virtue-signaling isn’t profitable, they might reconsider their politically-motivated policies.