In a recent development, Wells Fargo was replaced by Raymond James on a $310 million bond deal for the Cypress-Fairbanks Independent School District. The shift comes amid Texas' scrutiny over banks' environmental policies, specifically those aligned with the Net Zero Banking Alliance's commitment to reducing greenhouse gas emissions.
The decision follows Texas Attorney General Ken Paxton's announcement on Sunday, when he revealed a review of alliance members under a Republican-backed law. This law penalizes firms that limit their work with the oil and gas industry due to climate concerns.
Texas, leading the way with a $50 billion municipal bond issuance this year, enforces a law restricting public contracts with financial firms unless they affirm non-boycott of the oil and gas industry. The state's enforcement of this law has put several financial institutions under the microscope.
Wells Fargo, the state's 10th largest underwriter managing about $2 billion in Texas municipal bond deals in 2023, found itself ousted from the Cypress-Fairbanks Independent School District deal due to this scrutiny.
Paxton's office is also investigating whether Bank of America Corp (NYSE:BAC). and JPMorgan Chase & Co. (NYSE:JPM), can comply with this legislation. All involved parties including Wells Fargo, Raymond James, and the school district have declined to comment on these developments.
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