In one of
the more memorable scenes from Michael Moore's Bowling for Columbine, the filmmaker walks
into a rural bank in Michigan and promptly receives a free rifle for opening
a new account. Moore quips, "Do you think it's a little dangerous handing
out guns in a bank?"
Bank of America thinks it's more than just a little dangerous – it reportedly
wants to discourage some gun manufacturers from even having accounts at the
bank. Largely neglected by the mainstream press, two particular firearms
manufacturer cases represent an emerging political climate in U.S. banking. I
am not accusing anyone in the media of "bias by omission"
concerning the stories of McMillan Firearms Manufacturing and American Spirit
Arms, but these are fairly recent episodes with considerable consequence.
B of A justified freezing the deposits of 10-year customer American Spirit Arms for three weeks beginning Dec. 18 by saying
that the deposits were held for "further review." Even though
American Spirit Arms is a properly licensed firearms manufacturer which
submits to regular audits by the Bureau of Alcohol, Tobacco, Firearms and
Explosives and the Department of Homeland Security, Bank of America
also said, "We believe you should not be selling guns
and parts on the Internet." Happily, the Internet played a role in
resolving the issue, as business owner Joseph Sirochman
told anchorperson Megyn Kelly on Fox News' America Live.
Another disturbing episode involved McMillan Firearms Manufacturing in April
2012. In expanding a routine "account analysis" meeting
to include the larger political issue of overall business purpose, Bank of
America directly suggested that the firearms manufacturer take its
business elsewhere. Bank of America replied to the allegations here and McMillan responded again here.
Beginning in a visible way with the 2011 full-scale banking and payments
WikiLeaks, politically motivated acts by private
financial institutions appear to be on the rise. Banks are beginning to use
considerable discretion in deciding what constitutes an illegal act and
sometimes even an immoral act. Freeze the funds first – ask questions later.
After all, it's their bank, right?
Yes, private companies can choose who they elect to do business with.
However, it has a chilling
effect when the directives come in a soft way from
regulators or from a financially-supportive government. Historically, banks
exercise discretion and that discretion can escalate into subtle differences
in treatment. Such as when to file a suspicious activities report or when a
customer's deposits and withdrawals start to look excessively high.
Banks are increasingly in the role of enforcer and watchdog for the
regulators. That is the basis of enforcement for many of the country's
anti-money laundering laws and know-your-customer guidelines. The duty falls
to the financial institutions and they are periodically reviewed as to their
monitoring prowess. For the most part, banks do not have a choice in
providing this quasi-enforcement role on behalf of the government, but it
does set the stage for further encroachments into business and individual
Although Sirochman eventually succeeded in getting
most of his deposits released, he still proceeded to open new accounts at a
Afterwards, Bank of America sent The
Huffington Post this statement: "This customer's concerns have been resolved.
Any spike in transaction volumes is routinely reviewed by the bank in order
to protect our customers. This process is initiated regardless of the
industry in which they do business." (Indeed, B of A still banks other
gun manufacturers – a few weeks ago Chicago Mayor Rahm Emanuel sent CEO Brian
Moynihan a letter urging the lender to pressure a
firearm maker client to support new gun controls.)
Something clearly got bungled at Bank of America. No bank wants that kind of
publicity. Either a few rogue regional managers acted on their own behalf or
a policy directive from the corporate level was miscommunicated. This is a
complex issue and typically wide latitude is given on how policy directives
are implemented, including triggers for account freezes and their subsequent
release. It is also nearly impossible to ascertain or confirm from where
a subtle directive
originates, which is probably why these stories weren't investigated further.
How ironic it would be to have the North Country Bank and Trust from Moore's
film acquired by Bank of America in the next wave of bank consolidations.
February 12, 2013