The 2022 legislative session has adjourned … finally. The session dragged on, as expected, while the legislators and Governor hammered out a state budget. The budget was complicated by a massive revenue surplus, very narrow Republican majorities (not a single vote to spare), and election-year politics. The goal of a 100-day session was quickly abandoned, and ultimately the session dragged on to 166 days, just one week short of the new fiscal year.
What was the result for Arizona’s banking industry? The efforts of the Arizona Bankers Association paid off, and the banking industry escaped the session unscathed. In fact, the Association had a few proactive victories. We were able to clean up the Foreign Country Money Judgements law to insert a savings clause. The lack of a savings clause was thoroughly discussed in litigation that came before the Arizona Supreme Court, and with the input from the Court’s decision, we were able to make the law better. Additionally, we had several victories in getting amendments to legislation on data breaches and money transmitters. However, our biggest victories came in the form of defensive wins.
The biggest legislative challenges faced by the banking industry included efforts to eliminate the use of ESG factors (Environmental, Social Governance) in investment and banking decisions, as well as forced access laws relating to banking of the firearms industry. These bills were narrowly defeated because a few Republican members stood up for the right of a business to determine whom they choose to do business with in a competitive free market. Specifically, the proposed ESG legislation would have prohibited a financial institution “from discriminating against any person based on a political affiliation or other social credit, environmental, social, governance or similar values-based or impact criteria.” The bill broadly defined “discrimination” and would therefore have severely tied the hands of banks and large investors. Forced access legislation followed a similar narrative of “preventing discrimination” against firearms businesses. Despite the inability of the bill’s proponents to demonstrate actual harm or the inability to secure banking services, the bill advanced easily through committees but was finally held up before reaching the Senate floor.
Unfortunately, these wins may be short-lived as the face of the Legislature changes following the 2022 elections. Republicans are expected to increase their numbers in the Legislature following the recent redistricting process. The bills’ sponsors and like-minded legislators are expected to return, whereas many banking allies were defeated in the August primary or have chosen to retire from the Legislature. Not only do we expect these bills will be reintroduced in January 2023, but we expect the effort will be bolstered by the passage of similar bills in other states and the national attention being brought to ESG from Florida Governor and Presidential hopeful Ron DeSantis.
Before you know it, the next legislative session will be upon us. It is critical that the banking community be ready for the debate ahead. The Arizona Bankers Association will be prepared, having spent the interim meeting with legislators and collecting facts supporting our case. Please tune in to the Government Relations Committee (GRC) to stay informed and stay involved in advocating for the Arizona banking industry.
