Banks collecting info on gun purchases: an un-run letter to the editor

This letter was submitted to the Wall Street Journal in response to an article about banks seeking to collect information on gun purchases…

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This letter was submitted to the Wall Street Journal in response to an article about banks seeking to collect information on gun purchases. They didn’t run it.

The April 30 article “Banks, Credit-Card Companies Explore Ways to Monitor Gun Purchases” revealed that banks are considering obtaining more information on customers’ firearms purchases via credit card, with a possible eye toward restricting such sales. This follows announcements by Citi and Bank of America that they will refuse to provide some financial services to certain firearms businesses.

It may be unremarkable for the average business to put a social cause ahead of purely business considerations — but banks are not the average business.

Banks’ market power — the thing that enables them to influence society — is a privilege largely granted to them by our government. By law, banks enjoy government backstops: government-provided deposit insurance, government-paid interest on their Federal Reserve deposits, regulatory advantages over non-bank competitors, and access to government-maintained financial infrastructure. And of course, both Citi and Bank of America received large government bailouts to save them from their own mistakes.

It is appropriate to ask if banks should be allowed to use their government-granted privileges to impose their own social policy. The best answer? Remove as much favoritism as possible, and then let them use the market power they earn themselves as they see fit.

Failing that, restrictions that prevent banks from abusing their power may make sense.