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HB 2827 Would Force Banks To Do Business With Gun Manufacturers And Retailers

By Tom Maxedon
Howard Fischer, Capitol Media Services
Published: Monday, March 8, 2021 - 2:53pm
Updated: Monday, April 19, 2021 - 12:54pm
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The National Rifle Association and its allies in the firearms industry want Arizona lawmakers to force banks to do business with them.

In testimony to the House Judiciary Committee, lobbyists for both groups told lawmakers that some manufacturers are having problems getting loans from financial institutions. There also were complaints about retailers having access to point-of-sale terminals to process credit card transactions.

Michael Findlay who represents the National Shooting Sports Foundation, said this is more than a business dispute. He argued that anything that hampers production and sale of weapons has the potential of infringing on the Second Amendment rights of Arizonans to bear arms.

The measure, HB 2827, sponsored by Rep. Frank Carroll (R-Sun City West) now awaits debate of the full House.

But its future is not a sure thing, even in a legislature that has a history of approving any measure dubbed as protecting the right to own a gun. That because the measure could end up setting a precedent of the state telling companies with whom they have to do business.

And it did not escape the debate that the request comes just a year after the Arizona Supreme Court ruled that the owners of a Phoenix calligraphy firm have the constitutional right to refuse to provide custom wedding invitations when same-sex couples exercise their own constitutional right to wed.

Dan Reid, regional director of the NRA, said there is a particular problem that lawmakers need to address. "This prevents discrimination in lending practices within the firearms industry," he said. "If companies aren't able to secure lines of credit, if they're having problems processing payments, that, in turn, could impact consumers on the back end."

That drew questions from Rep. Diego Rodriguez (D-Phoenix). "What would be the discriminatory portion of a bank or financial institution to say, 'We just don't want to loan you money,'?" he asked.

Reid said there are examples where companies that have been current with their loans suddenly find they can't get money "purely on the basis of the business."

That did not impress Rodriguez as unfair or illegal discrimination. "Let's just say a bank makes a decision, 'we no longer want to be in the adult industry, for example," he said. "Aren't we talking about the same thing?" Rodriguez continued. "Sometimes people just decide they don't want to do business with other people any more just because they changed their decision-making process."

Reid rejected the comparison. "We're talking about two very different things here as far as a constitutionally protected right," he said, not addressing whether adult businesses also have a constitutionally protected right under the First Amendment.

"A disturbing trend has developed in which financial institutions are declining to work with entire industries based upon the desires of a small vocal minority who are using the modern-day megaphone of social media to cancel entire lawful commerce and businesses," Findlay said. 

He also said there is precedent for what the firearms manufacturers and dealers are seeking. "Government has a long history of regulating the banking industry and financial institutions," he said. For example, he cited the Equal Credit Opportunity Act. It bars discrimination on the basis of race, color, religion, national origin, sex, marital status, receipt of public assistance or good faith exercise of any rights under the Consumer Credit Protection Act. There's also the Americans with Disabilities Act which provides civil rights protections to those with disabilities.

Rodriguez bristled at the comparisons. "Are you equating legislation that is designed to prevent 'redlining' in racial discrimination to this bill?" he asked, referring to federal protections against housing discrimination based on race.

Findlay backed off. "I'm not equating it to those two things," he said. But Findlay said it falls within the statutes of what is and is not permissible. "If you prevent an entire industry, and your entire policy is to prevent an entire industry from access to capital and financial services, then it would be, as the U.S. Code says, discrimination," he said.

That didn't satisfy Rodriguez who pointed out that the legislation would allow a "victim" of this kind of discrimination to get not only actual damages but also triple and punitive damages. "The idea that equating a manufacturer's access to capital is the same as actively, proactively punishing and preventing discrimination in lending, which has been throughout the history of this country, I take offense to that," he said. "This bill gives remedy to gun manufacturers that I, a person of color, wouldn't have even if I could show I was discriminated against."

Rep. Diego DeGrazia (D-Tucson) suggested that Findlay was taking liberties with what constitutes "discrimination." He said that the law bars discrimination against "protected classes" and continued, "Those classes are generally based on race, color, religion, national origin, sex, marital status, age," DeGrazia said. "Are you saying that a company that wants to manufacture firearms or firearms products is somehow a protected class?" he asked.

But House Speaker Rusty Bowers (R-Mesa) said the definition is not as narrow as all that. "The 'protected class' here is those who exercise the right to bear arms," he said.

Bowers said it's not like the banks are taking away someone's guns. "The angle is we will address and use our considerable power to influence the banking institutions that otherwise are happy to loan to anybody to make a profit," he said.

Carroll said the state needs to defend the firearms industry, saying it is "supporting the health and safety of persons with their Second Amendment right to defend themselves."

No date has been set for the bill to go to the House floor.

BusinessPolitics Retail + Consumer