Wyoming State Treasurer and current Republican gubernatorial candidate Mark Gordon has fired back at the Bank of the West following its decision to pull its investments from the fossil fuel industry, impacting millions of dollars in public monies managed by the bank.
The decision comes one day after the bank announced it would divest itself from all businesses involved in the production, exploration and distribution of natural gas and coal – industries that account for approximately one-quarter of Wyoming’s overall GDP and roughly 70 percent of the state’s taxable revenue. Anticipated to be a major blow to the state’s energy-centric economy, the announcement was immediately characterized by U.S. Senator John Barrasso as a politically motivated and “fashionable” decision made by the San Francisco-based bank done without consideration for the state of Wyoming and its economy.
Bank of the West joins a growing share of firms in the financial sector that are divesting themselves from fossil fuels. But it also bucks a trend set by industry leaders: between 2016 and 2017, funding by the world’s largest banks in fossil fuels increased by approximately 11 percent, according to the Sierra Club.
In a response to the announcement from the treasurer’s office Thursday morning, Gordon stated that the state of Wyoming was now, in effect, closed for business, and that he would deny any applications from the bank to place “certain state funds” into their institution.
These funds are sourced from the state’s Time Deposit Open Account program, which circulates the state’s cash reserves through two annual applications granted to approved banks, which can then be used as loans to the bank’s customers. Wyoming currently has none of these funds held with the Bank of the West, Gordon said.
However, the state currently has roughly $300,000 in public funds held with the bank in an account largely consisting of funds from sources like state park entrance fees.
That $300,000, Gordon said, cannot be removed unilaterally, a move that will be reviewed in the coming months. However, the open account funds — which fall explicitly under his purview — can be denied at-will by the treasurer’s office. There are numerous banks approved to hold these open account funds as public depositories, and Gordon said that money is highly lucrative, set at low interest rates and high liquidity.
“We have more economic activity now, and TDOA money is very competitive money set at a low rate,” said Gordon. “Banks are very anxious to get this money.”
“It is a significant issue for them if they plan to do any additional lending in Wyoming,” he added.
It is unclear how active the Bank of the West’s annual lending activity is within the State of Wyoming. However, Gordon anticipates the move will severely impact the bank’s ability to offer loans to small business owners within the state, forcing those businesses to look to other lenders.
Asked whether or not the announcement had any connection to his current campaign for governor, Gordon said the decision to pull the funds was more a statement to the bank that such decisions needed to be made with more consideration around how they would affect the economy of a state where they operate numerous branches.
“This is simply done on the principle fossil fuels have always been an important industry in Wyoming,” said Gordon. “We’ve taken a lot of leadership on energy development, and there are ways in being more efficient in our use of them. Making a statement like this not only smacks of politics on their part, but in some ways seems hypocritical if they’re willing to accept money made from our industries. That’s problematic.”
“It’s always disappointing to have a large bank make an announcement like this, especially when Wyoming has led the way in areas like carbon sequestration,” he added. “We were one of the first states to build a body of law around that, and we’ve always been about finding solutions, not just making fashionable political statements.”
Editor's Note: Barrasso's comment on the bank's divestment was directed more toward the state economy as a whole, rather than the energy sector specifically. As noted in an article from Energy Reporter Heather Richards earlier this week, oil and gas gas developers typically rely on private equity to fund projects -- not banks.