(Bloomberg) --Jimmy Patronis has a message for banks holding $36 billion in Florida's cash: Drop the corporate activism or get out.
The warning from the state's chief financial officer comes after a new law was passed banning banks from holding public funds if they use social and political factors in lending decisions. Patronis said that Florida is willing to cut ties with some of the nation's largest lenders, including Bank of America and Wells Fargo, that run afoul of the rules.
"If we lose some banking relationships because of the direction that our state is going in right now, it may be a banking relationship we needed to reconsider anyway," Patronis said in an interview in Tallahassee, Florida.
Florida Governor Ron DeSantis has attacked investments based on environmental, social and governance criteria as part of a larger conservative agenda at the center of his prospective 2024 presidential bid. The Republican-controlled Senate approved a bill last month which bans state and local governments from using ESG benchmarks when selling debt or investing public money.
Florida has already begun withdrawing some $2 billion in state money from BlackRock Inc. and specifically called out Chief Executive Officer Larry Fink, one of Wall Street's leading ESG advocates.
More potential targets may be in sight. Wells Fargo, which holds $6 billion in public funds from Florida, has made moves to end its relationships with the National Rifle Association and outlined emissions targets for its clients. Bank of America, which holds $2 billion of Florida's coffers, has restricted its business with firearms makers.
Patronis said banks will have to reverse those policies to keep their accounts with Florida. He's called the financial industry "woke," accusing banks of "looking down on everyday Americans" and "cozying up" to the Chinese Communist Party.
Bank of America declined to comment on the new legislation. Wells Fargo did not immediately respond to request for comment.
Florida has a total of $36 billion in public deposits, including cash from the state, counties and cities, according to the Florida Treasury's Bureau of Collateral Management.
Under the new rules, banks must prioritize earning the highest returns in their financial decisions in order to handle Florida's public funds. But critics point to ambiguous language that doesn't outline exactly what qualifies as corporate activism.
"A bill like this just reeks more of messaging and theater than it does substance and concern," said state Senator Jason Pizzo, a Democrat who opposed the bill.
By July, banks operating in Florida will have to sign an affidavit indicating they are complying with the law. But Pizzo pointed out there's no clarity in either the contents of the document and who has to sign it.
The ESG overhaul is just one of dozens of bills that breezed through the Florida legislature this year, in a session that's seen the state turn further right than ever. It's reflective of a wider GOP-led movement against ESG investing, which includes states like Texas blacklisting banks from government deals due mostly to their policies on fossil fuels.
Representative Bob Rommel, the bill's sponsor, said that lenders will be held accountable for refusing to do business with everyone from firearms makers to tobacco- and liquor-producers.
"If Wells Fargo decides that they're going to discriminate against Floridians then they will not be getting any of the public deposits in the state of Florida," Rommel said. "Whether it's Wells Fargo, Chase or Joe's small bank."
