The Nebraska Bankers Association is raising concerns about legislation that would bar state treasurers from depositing public funds in financial institutions that could use the money to promote social or political objectives.
Legislative Bill 67, introduced in January by conservative lawmakers, is part of a pushback in Republican-led state governments across the country against so-called “woke capitalism,” a term that encompasses new environmental, social and governance policies at many banks and other large corporations. Critics worry that lenders’ efforts to address climate change and promote diversity and equality will translate into politically biased credit decisions.
Robert Hallstrom, the bankers association’s general counsel, said that LB 67 is “too vague” and that the trade group is pressuring supporters of the bill as well as Nebraska’s state treasurer, who supports the legislation, to ensure wording of the bill matches its “original intent.”
“We are working to make sure that [LB 67] gets back to the intent of having the state treasurer remain neutral with regard to exerting any influence or direction over financial institutions regarding their banking activities or practices,” Hallstrom said during an interview.
“Other than the fact that state funds are some portion of our deposit base, we can’t identify that state money was specifically used for one purpose or another,” Hallstrom said.
During a public hearing on Monday to discuss the legislation, Nebraska Sen. Julie Slama, a Republican who proposed LB 67, said that the bill is meant to protect against future state treasurers using public funds “to further political or social agendas,” according to a Nebraska Examiner article.
John Murante, Nebraska’s Republican state treasurer, has voiced support for passing LB 67 and in November wrote an opinion article for the National Review describing the adoption of ESG policies by banks as an attempt to “achieve through the backdoor goals that even our own legislation hasn’t been able to achieve.”
In December, Nebraska State Attorney General Doug Peterson issued a report warning against ESG lending and investment strategies as “a threat to our democratic form of government.”
This week’s political back and forth over ESG in Nebraska is playing out alongside conservative reaction in other state governments.
Republican lawmakers in Wyoming this month introduced House Bill 210 to clamp down on “financial institution discrimination.” The legislation calls for the state treasurer to make a list of lenders that refuse to do business with energy companies operating in the state.
In Kentucky, State Attorney General Daniel Cameron was sued in November by the Kentucky Bankers Association, which claims the state’s top lawyer overstepped statutory limitations and violated the First Amendment rights of banks by compelling documents, communications and information related to their environmental lending practices.
Overall, more than a dozen Republican-led states have launched investigations into alleged antitrust and consumer law violations related to ESG investment practices at six banks that are members of the United Nations’ Net-Zero Banking Alliance.