Gun Control Advocates Have Scored A Major Victory That Nobody Is Talking About
It's one of the few places where the high-profile publicity campaign in support of increased gun control has led to a real world result.
Last week advocates for gun control were dealt a humbling blow when legislation to require background checks at gun shows publicly flopped on the floor of the Senate after weeks of work.
Despite the political defeat, however, something very interesting has happened in the private sector.
GE is based in Fairfield, Conn., and several employees have children in Sandy Hook Elementary School, the site of the December mass shooting, according to the WSJ. Jeff Immelt, the CEO of GE, had a meeting with employees after the shooting. This, among other reasons, led to the lender ending financing for guns.
GE is the fifth-largest lender in the country. While their decision to stop lending to gun buyers will only impact a very small portion of the market, the optics of it are not good for the business of guns.
The decision brings GE in line with Wells Fargo and Citigroup, both of which stopped financing gun purchases several years ago. But firms directly involved in the gun trade are having an even harder time.
Cerberus Capital, the private investment company that owns Freedom Group — the manufacturer of the assault weapon Adam Lanza used to murder 20 children and 6 adults at Sandy Hook Elementary School — announced days after the shooting that they planned to unload the company from their portfolio.
But Cerberus has been having difficulties finding a buyer for the company. Other gun manufacturers are using this opportunity to kick Freedom Group's tires, so to speak, and investigate their financials while a buyer remains elusive, according to the Wall Street Journal and Bloomberg News.
It's come to the point where several individual Cerberus partners are pursuing a bid as a way to put a floor on the auction. Multiple investment banks — reportedly including JPMorgan Chase, Credit Suisse and Barclays — declined to aid Cerberus in the sale and have refused to represent buyers to avoid getting pulled into a politically contentious gun debate.
The sale is worth millions in fees — Freedom Group could fetch as much as $1 billion — and yet multiple banks have decided that getting in the gun business isn't even worth all the money when reputations are at risk.
According to Bloomberg news, "Cerberus may have to take a lower price or be unable to sell the business because so many banks are unwilling to work on the deal, said one of the people with knowledge of the matter."