SIOUX FALLS, S.D. (KELO) — Two top Republicans said that South Dakota Legislature already addressed a gun-related financial bill at least once and saw no need for it.
When Gov. Kristi Noem signed her executive order at the NRA convention on Friday, April 14, she did not mention the South Dakota Legislature had already rejected a similar bill.
Noem’s executive order 2023-04 would bar state government agencies under her direction from contracting with businesses that discriminate against “a firearm-related entity.” It appears to be directly mainly at banks and financial institutions with at least $100 billion in assets.
“We held a hearing on this issue during the last legislative session. At the hearing, we learned that South Dakota banks in our free market had solved the problem, and there was no need for government intrusion,” Republican Legislative President Pro Tempore Lee Schoenbeck said in an email statement.
SB182 was rejected in the 2022 Senate Commerce and Energy Committee.
“The Legislature has turned down (proposed legislation) …,” Republican Speaker of the House Rep. Hugh Bartels said. Lawmakers couldn’t find a South Dakota bank for which the proposed gun-related bill would apply, Bartels said.
“The Legislature didn’t think we needed it,” Bartels said.
The South Dakota Bankers Association (SDBA) opposed SB182 in 2022.
“Not every bank has the expertise required to bank customers in all their varied business pursuits, and firearms are included in that along with agriculture, technology, and retail in its several forms,” said Karlton Adam, the president of the SDBA.
The free market should prevail, Adam said. SB182 would have set a precedent that could have hampered the free market system, Adam said.
Noem’s executive order could also set a similar precedent, he said.
If it ever gets to a point where banks do not bank a certain industry, then there could be problems. But as of now, banks have the ability to bank industries in which they have expertise, Adam said.
Adam said the SDBA was not consulted about the executive order by Noem and her administration. It was informed a couple days prior to her signing it.
“The South Dakota Bankers Association appreciates the Governor’s interest in the financial services sector in South Dakota. Banks in South Dakota range from some of the largest to some of the smallest, and all are important contributors to our state’s economy and vitality,” Adam said. “South Dakota banks employ thousands of South Dakotans, and contribute tens of millions of dollars in unclaimed property to the State of South Dakota each year.”
Bills similar to Noem’s executive order have been introduced in several other states including Arizona. A law passed in Texas in 2021 bars most government contracts there with companies that curb or restrict their business with the gun industry.
“The gun lobby has been pushing a bill for the last couple of years,” Bartels said.
On the opposite side, some states such as California, have introduced bans on state contracts with financial institutions that work with the gun industry.
Bartels said Noem’s executive order is not as broad as bills addressed by the South Dakota Legislature because it deals with banks and financial institutions with $100 billion or more in assets.
“I don’t know if any bank of that size does business with the state,” Bartels said.
South Dakota does have several banks with $100 billion or more in assets. But that does not mean individual banks but the bank or institution as a whole. For example, according to the Federal Reserve, JPMorgan is the largest commercial bank in the U.S. with assets listed of $3.20 trillion according to Bankrate. Bank of America is the second largest with $2.41 trillion in assets followed by Citigroup with $1.77 trillion in assets. Wells Fargo and U.S. Bancorp round out the top five.
Gun lobby groups and the NRA have targeted Citigroup and other financial institutions for their approaches or policies on the gun industry. In 2018, Citigroup rolled out a firearms policy that included not selling bumps stock or high capacity magazines for its retail clients that sold guns.
Bank of America announced in 2018 it would stop financing makers of what was called “military style” guns.
KELOLAND News has asked Noem’s office for specific information on the number of $100 billion banks and institutions that do business with entities under her control. The Governor’s office was also asked for specific evidence on why her executive order is needed.
Ian Fury, Noem’s communication director said in an email, “(The) State of South Dakota does not maintain any lists of the assets of national banks, so I don’t have any state information to provide to you on that account.”
As to any specifics on how the order would be applied, what contracts it could affect, the need for such an order, why the order is needed after the Legislature rejected a similar bill, Fury said in an email. ” …the Executive Order speaks for itself. It answers all of your other questions.”
Bartels and other legislators referred KELOLAND News to the Governor’s office for questions on how the executive order would be applied and state contracts that would be affected by the executive order.