Cuomo’s Bludgeon and the NRA

Nice business you have there. It would be a shame if anything happened to it. Whether the threat comes from the mob or the governor, it’s not a threat one takes lightly in New York. This time, Gov. Andrew Cuomo has ordered it be used against the National Rifle Association.

“I am directing the Department of Financial Services to urge insurers and bankers statewide to determine whether any relationship they may have with the NRA or similar organizations sends the wrong message to their clients and their communities who often look to them for guidance and support,” the governor wrote in a statement.

Whether anyone looks to bankers and insurers for “guidance and support” is a question few consider, probably because no one has ever done so, but what other words could Andy use to explain why he was using his authority over regulatory agencies to deny basic availability of private services to an organization that supported a cause he didn’t? He has to say something, and “because they’re awful and we need to destroy them” sounds a little negative. Nobody likes a governor who is negative.

The Department of Financial Services, which regulates the banking and insurance industries in New York, followed up with guidance letters to insurance companies and banks.

The two letters caution recipients that “[t]hey are in the business of managing risks, including their own reputational risks, by making risk management decisions on a regular basis regarding if and how they will do business with certain sectors or entities.”

The New York Department of Financial Service wields no authority over how banks and insurers manage their “reputational risk,” which appears to be merely two words where one would do. And in New York City, where there is no gun culture outside of rappers, sports heroes and cops, the NRA is a pariah organization. It was before. It is now. It will likely be for the foreseeable future. So what’s new?

The Department encourages its chartered and licensed financial institutions to continue evaluating and managing their risks, including reputational risks, that may arise from their dealings with the NRA or similar gun promotion organizations, if any, as well as continued assessment of compliance with their own codes of social responsibility. The Department encourages regulated institutions to review any relationships they have with the NRA or similar gun promotion organizations, and to take prompt actions to managing these risks and promote public health and safety.

In other words, if you want the regulatory agency to smile upon you, do as you’re told, and you’re told to sever your relationships with the NRA. To promote health and safety, of course.

The question isn’t whether the NRA is a wonderful organization or terrible. The question is whether a governor, who happens to lead a regulatory agency in the financial capital of the nation, should order his agency to use its fiat in the myriad aspects of its legitimate concern to undermine the necessary business relationships that sustain an organization reflecting a disfavored political view.

No one can force banks and insurers to do business with the NRA if they choose not to. But forcing them not to is as New York as it gets. You don’t get a permit for that sidewalk cafe if you piss off a local pol, and in NY, there’s a permit for everything. There’s even a cottage industry called “expeditors” to get permits.

Usually, such abuses are at least thinly veiled, because they’re widely acknowledged to be wrong. But this isn’t really the case in places like New York, where everything is politicized and much business requires an “expediter, an imprecise term that is used to describe the men and women whose workdays are spent queuing up at the Manhattan branch of the New York City Department of Buildings to file the documents and pull the permits that allow construction projects—your kitchen renovation and the high-rise next door—to go forward,” as the New York Times put it in 2014. Expediters often bribe officials to speed up the process—or to just get anything done. Attorney John Chambers, who expedites gun permits in New York City, was recently convicted of bribing an NYPD sergeant.

The bigger the project, the higher up the process goes.

This is the business and political culture in which Donald Trump grew up and which molded his Rodney Dangerfield-in-Back to School view of the world. But with the money they wielded, Trump and company used a higher level of middlemen, including mayors, such as Abe Beame, and governors, such as Hugh Carey, to get permission for their projects and to block competitors.

Depriving the NRA of the infrastructure it needs to exist is a pretty big job, so it falls to Gov. Andy to do the dirty work. And most New Yorkers won’t lose a moment’s sleep over this latest use of regulatory authority to destroy an organization that has few adherents in the state. So what’s the problem?

Weaponizing regulatory power—if normalized—opens the door for Cuomo’s political opponents to do the same to his allies in the places where they govern. If liberals demonize the NRA, the equivalent bogeyman for their enemies is Planned Parenthood, which is vulnerable if conservative regulators adopt the same tactics. Actually, anybody who takes a controversial position on matters of public policy is at risk if the targeting of opponents through regulatory agencies becomes standard.

If the tactic is fine when used against the NRA, it will be just as fine when the tide turns and it’s used against other organizations. At some point, it could be one that New Yorkers like better than the NRA. Or the governor of another state which holds sway over banks and insurers, a redder state, may decide to pick up his phone and pen and flex his muscle.

The NRA is exceptionally controversial, but to point out why it’s the worst doesn’t make weaponizing regulatory authority to destroy an organization with a political agenda you despise a good idea. Once the bludgeon has been raised, it can fall on any organization, on any cause, that’s out of favor with the person wielding it. That may not always be your guy.

17 thoughts on “Cuomo’s Bludgeon and the NRA

  1. PseudonymousKid

    Dear Papa,

    Thanks be to our lord and savior, Andrew Cuomo. Bend a knee, Pops. That, or carry a big stick too. “Regulatory authority” is better as just “authority.” Obey, or else.


    1. SHG Post author

      The shortest path between two points is a regulatory agency. But anybody can walk that path.

  2. paleo

    The NRA takes some extreme positions, but they’re a single-issue voluntary association/lobbying group. All single-issue lobbying groups take extreme positions. It’s the nature of the beast. PETA, anybody? The environmental lobby? The NYPD Patrolman’s Union? The Southern Baptist Convention? The SPLC? All of them are on the side of the angels so they get to be one-note ponies.

    And on a side note, the big investment banks headquartered in NYC nearly destroyed the world economy only a decade ago. They have zero “reputational risk” – their reputation is already the same as the guy that sticks a gun in your ribs and demands your wallet.

  3. MonitorsMost

    Oh, Andy. When Obama’s Department of Justice initiated Operation Choke Point, it had tactical and structural advantages that you don’t. First and foremost, the feds aren’t subject to suit under 42 U.S.C. 1983. You my dear capital S State actor, are. Second, President Obama’s was smart enough not to name a specific non-profit entity as the source of his consternation so that his announcement wouldn’t be Exhibit A in the case-in-chief claiming discrimination and retaliation under the First Amendment and a dues process violation under the 14th Amendment.* While you Andy probably need to start consulting with the poor schlub in Schneiderman’s office whose going to have to defend your stupidity ASAP.

    If I recall correctly, 14th Amendment procedural due process claims can be a basis for a Bivens action but 1st Amendment claims cannot. Distinction is moot under 1983 though.

      1. MonitorsMost

        My footnote asterisk didn’t work correctly. I agree this is 1983 all the way. My mention of Bivens was in relation to a hypothetical where someone sued the Feds over operation checkpoint. The Supreme Court has rejected expansion of Bivens as an artifact of heady days where SCOTUS creates causes of action so we are stuck with only what we have. Bivens for 4th Amendment. Davis for procedural due process. If I recall correctly, Bivens was never extended to address infringements of the First Amendment. Which is why the hypothetical (poor) case against the Feds would look different than the (good) case against Mr. Cuomo.

        1. SHG Post author

          So this was just an afternoon’s indulgence into the good ol’ what if this was Obama and it was a Bivens case instead of what if this was Andy and it was a 1983 case, because reasons. Got it.

          1. MonitorsMost

            I would categorize it as explaining why what Andrew Cuomo did was 10x dumber than Operation Choke Point which I assume gave Cuomo the idea for this.

            But how could posting comments be considered anything other than an indulgence? Martin Luther is probably turning in his grave.

  4. MattO

    It didn’t take long for them to back up the threat, either. Just hours after your post, NY DFS announced it had fined Chubb Insurance Co. $1.3 million for doing business with the NRA. Technically for violating NY Insurance Law by providing insurance for intentional wrongdoing, among other things, but the timing is notable. No link, per rules, but the press release is easy to find on the DFS website – which is surely the point.

    1. SHG Post author


      Financial Services Superintendent Maria T. Vullo today announced that Chubb Ltd. and Chubb’s subsidiary, Illinois Union Insurance Company, have agreed to pay a $1.3 million fine as part of a consent order with the Department of Financial Services (DFS) for underwriting the National Rifle Association-branded “Carry Guard” insurance program, through Lockton Affinity, in violation of New York Insurance Law.

      Well, that’s about as flagrant an attack on viewpoint as can be.

    2. DaveL

      If “Carry Guard” is “insurance for intentional wrongdoing”, then arguably so is any insurance that offers to cover a defense, whether civil or criminal.

      1. LocoYokel

        Wonder what they would think of the LawShield program that is offered by a law firm in Houston.

      2. LocoYokel

        A second thought on the “insurance for intentional wrongdoing” meme. Would that concept also not apply to basically any liability insurance if they decided to go after you? After all, if you were not planning to do something wrong why would you need insurance to cover the event?

  5. Dan

    Looking to insurers for support? Of course, people do it all the time–it’s called filing a claim. For guidance? Not as common, no doubt, but it’s by no means unheard-of to consult with one’s insurer for guidance on minimizing one’s exposure.

  6. Pingback: Cuomo to regulated banks, insurers: it might be risky for you to go on dealing with the NRA - Overlawyered

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