Texas Attorney General Ken Paxton has dropped his threat to block major Wall Street banks from participating in municipal bond deals after these banks exited a controversial climate-finance group.
In 2023, Paxton’s office initiated a review of financial institutions that were members of the Net-Zero Banking Alliance (NZBA), an initiative he had strongly criticized. This review stemmed from Texas legislation aimed at punishing financial firms accused of “boycotting” the state’s oil and gas industries. Recently, several prominent banks, including JPMorgan Chase & Co., Bank of America Corp., Morgan Stanley, and Wells Fargo & Co., announced they were leaving the alliance.
Review of Banks Closed
On Tuesday, Paxton’s office confirmed that it had closed its investigations into the four major banks — Wells Fargo, Bank of America, Morgan Stanley, and JPMorgan. These institutions are significant underwriters of state and local debt in Texas, one of the largest markets for municipal bond transactions. The Texas Attorney General’s office plays a critical role in approving most public bond offerings, giving Paxton considerable influence over which banks are eligible to participate in these deals.
No Immediate Comment from Banks
Representatives for Morgan Stanley, Wells Fargo, and JPMorgan did not immediately respond to requests for comment outside of business hours. A spokesperson for Bank of America declined to provide any comment on the matter.
Paxton’s Criticism of the NZBA
In his statement, Paxton criticized the Net-Zero Banking Alliance, claiming it encourages banks to pursue “destructive climate goals” that could conflict with their obligations to consumers and investors. Paxton argued that the alliance’s goals threatened the state’s oil and gas industries, which play a vital role in Texas’ economy. He also warned that continued membership in the NZBA could restrict banks from contracting with Texas governmental entities.
“The NZBA seeks to undermine our vital oil and gas industries, and membership could potentially prevent banks from being able to enter into contracts with Texas governmental entities,” Paxton said in his statement.
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