“I think it does have a chance of becoming more common going forward.” used to underwrite about 35% of the debt in the market, so they’ve left a really big gap.” “This is not the first time we’ve seen states use municipal markets as a way to enforce bank behavior they want to see, but this is new in its scale in that five large banks left Texas. “This is a really big rule for the municipal space,” Garrett said. That means cities can no longer use those banks as underwriters for municipal bonds, which are one of the main ways that cities raise money.Īfter Texas passed the law, five of the largest underwriters exited the market: JPMorgan Chase, Goldman Sachs, Citigroup, Bank of America, and Fidelity. The legislation is aimed at protecting Texas’ reliance on the oil and gas and firearms industries by prohibiting local jurisdictions from contracting with banks that have adopted environmental, social, and corporate governance policies against those industries. In their paper, Wharton assistant finance professor Daniel Garrett and Ivan Ivanov, an economist with the Board of Governors of the Federal Reserve System, documented the financial impact of Senate Bills 13 and 19, which took effect Sept. Wharton’s Daniel Garrett speaks with Wharton Business Daily on SiriusXM about the financial consequences states face when they boycott financial institutions over their ESG policies.Ī Texas law that bans its municipalities from doing business with banks that have ESG policies against fossil fuels and firearms is driving down competition for borrowing and costing taxpayers millions in extra interest, according to a new study from Wharton. Vigilant Leaders: Paying Attention to What Matters Most July 25, 2022.See It My Way: Top Tips for Persuading Others August 9, 2022.Preventing Burnout: The Demand-Control-Support Model September 27, 2022. ANTI PHOTONIUM XT CHARGE HOW TOMeet the Authors: Wharton’s Katy Milkman on How to Change May 14, 2021.Meet the Authors: Mauro Guillén on How Businesses Succeed in a Global Marketplace June 21, 2021.Meet the Authors: Wharton’s Peter Cappelli on The Future of the Office November 4, 2021.Meet the Authors: Erika James and Lynn Perry Wooten on The Prepared Leader October 3, 2022.How Social Class Affects the Career Ladder October 29, 2021.How Data Analytics Can Help Advance DEI January 18, 2022.Action, not Words: Creating Gender and Racial Equity at Work July 11, 2022.Navigating Microaggressions at Work November 1, 2022.Great Question: Kevin Werbach on Cryptocurrency and Fintech July 21, 2021.Great Question: Dean Erika James on Crisis Management August 16, 2021.Great Question: Wendy De La Rosa on Personal Finance October 15, 2021.Great Question: Witold Henisz on ESG Initiatives November 17, 2021.Investing with Impact: Becoming a ‘Responsible Steward’ March 22, 2022.Making the Business Case for ESG May 3, 2022.How Companies and Capital Can Be Forces for Good June 21, 2022.Investing in Refugee Entrepreneurs in East Africa August 8, 2022.How the Dialogue on Diversity Is Reshaping Business December 7, 2020.Tackling the Climate Crisis: Can Business Lead the Way? October 25, 2021.How Corporate Governance Is Changing November 23, 2021.Beyond Business: Humanizing ESG December 13, 2021.
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