It’s a tough quagmire and surprisingly, it would appear some companies are actually bailing on the opportunity to turn a profit in lieu of the human condition. GE Capital is just one more lender that says it’s out of the lending business for gun manufactures and gun sellers. But then there’s the Second Amendment.
Citing the Sandy Hook shooting this past December, General Electric’s financing division is finished with mixing guns and money. Then again, it’s not going to be that big of a loss. It lends to less than 75 retailers anyway. Nevertheless, it’s not the first company to make such an across the board statement. GE Lending Spokesman Russell Wilkerson notes that it’s already ceased its lending to “some” gun merchants in 2008 but that after a “more rigorous audit process in our sporting goods segment in light of industry changes, new legislation and tragic events that have caused widespread reexamination of policies on firearms”. Apparently, it’s involved with more businesses in the gun making industry that it realized.
Does this mean we have another big business that has a conscience that it equates to a problem? Maybe, especially considering the world’s most watched hedge fund quickly and quietly sold every bit of its gun stock recently. Tiger Global Management also cited Sandy Hook as its belief behind losing funding.
Nation’s Largest Gun Maker Out
But there’s more. You may recall it was investor pressure that led to Cerberus Capital Management to put up its stake in Freedom Group, the nation’s largest long-gun maker and the company that produced the semi-automatic rifle used at Sandy Hook. Many are questioning its decision though. It could be sold to Freedom Group founder, Steven. This won’t be good from an ethical perspective. Really, when it comes right down to it, there are legitimate justifications on both sides of this tough dilemma. Lying about it, though, is the sure fire way of taking the ethics out of it and painting oneself as a greedy and uncaring money monger. For some, it comes down to picking a side and sticking with it – but sugarcoating it isn’t the way.
Things just got a bit more complicated for this debate, too. Bank of America, one of the world’s largest financial entities and serving close to 60 million customers in more than 40 countries, appears to have staked its loyalties on the other side of the Constitution this week. An Arizona-based firearms company says it is being treated unfairly by Bank of America because it makes rifles, gun stocks, ammunition and other firearms equipment. The bank denies the claims, but many say the denials leave much to be desired.
Kelly McMillian, operations director of the McMillian companies, explained that a vice president of one of Bank of America’s branches said that the bank longer wished to do business with the firearms company because of what it manufacturers. McMillian said it has nothing to do with the financial position, which is said to be strong, but rather, the one comment the bank’s vice president made,
He said the bank needed to assess the risk of doing business with a firearms manufacturer.
McMillian continues and said another bank executive visited his company and put the final nail in the coffin with their business. He insists the bank made no alternative offers, such as restructuring the debt, redefining the loan’s specifics or any other solutions. McMillian said says he’s never “missed a payment or bounced a check”. Still, the bank declines to comment on McMilian’s claims.
What’s so interesting is that the bank and the gun manufacturer recently entered into a $250 million deal.
Degrees of Separation
There could be more once you scratch the surface, at least as far as GE is concerned. The death toll at Sandy Hook hit too close to home. The financial giant’s headquarters are in Fairfield, Conn., just 35 minutes to the south of the school. Not only that, but the father of the shooter, Peter Lanza, is an executive with GE Financial. For now, GE will continue to lend to other businesses that sell firearms, including Wal-Mart, the nation’s largest seller of firearms and ammunition as well as Dick’s Sporting Goods.
There’s a lot at stake. GE’s finance arm is today the fifth largest commercial lending entity in the country and accounts for an impressive for 31% of GE’s total revenue last year. That equates to $45.7 billion and by delving into certain niche markets, it added another $107 billion in loans.
But what about the fact that many of these banks also participated in TARP, the taxpayer funded bailout of banks beginning in 2008? Bank of America received more than $45 million. Does it have a responsibility to those that do support the 2nd Amendment and feel it’s wrong for the banks to not lend based simply on the fact it manufacturers guns? Already, some banks are opting not to provide funding for companies in states where marijuana is legal. Is it the same thing?
And then there are the other controversies, including the recent decision to issue credit cards to those with no social security numbers, usually illegal immigrants. Plus, many banks, including Bank of America, was targeted by the Occupy Movement. Clearly, the banks in this country have many public relations problems. Should they be taking on the 2nd Amendment? It’s nothing new that some banks steer clear of lending to certain businesses. Wells Fargo hasn’t financed businesses associated with making or selling guns more than a decade ago. Citigroup doesn’t finance these types of loans either.
The National Rifle Association is holding its comments until it has more information. Some say it’s just giving the banks the opportunity to stumble on their own contradictions.
So what are your thoughts? The Constitution makes it legal to own guns in this country. The fabric of the country, however, is built on freedom – the freedom to do as we choose, including who we ultimately do business with, how we define our morals and even the freedom to form an opinion on guns. It’s a tough problem, no doubt, but ultimately, something has to give.