Jane Fraser, chief executive officer of Citigroup, during a meeting with President Joe Biden in Washington, D.C., on Oct. 6, 2021. Bloomberg

Wall Street has always been involved in politics even if bank bosses sometimes want to pretend disinterest. In the past, they were able to stick mainly to battles about tax and regulation. Now, it is ever harder to avoid the U.S. culture wars.

Citigroup Chief Executive Officer Jane Fraser has stuck her head highest above the parapet with vaccine mandates to combat COVID and pledges of support for female staff in states that are banning or criminalizing abortions.

Jamie Dimon at JPMorgan Chase wouldn’t answer the question directly on Bloomberg TV last week, but he did say the bank would always look after the health of its staff. His institution and Goldman Sachs are both discussing policies like Citigroup’s now that the Supreme Court appears set to overturn Roe V. Wade, Bloomberg reported.

Fraser told shareholders at their annual meeting last month that funding travel for abortions wasn’t political but meant to ensure equal health care for all staff wherever they live.

This isn’t the only area banks are getting caught in the cultural crossfire and being denounced as “woke” bogeymen. Policies around finance and payment for guns have already helped turn municipal bond sales into an unlikely battleground.

Texas passed laws last year to block banks from underwriting muni bonds if it deems their gun-sale policies restrictive. Other states are jumping on the bandwagon with copycat laws, including Arizona, Kentucky, Ohio and West Virginia, which is considering an additional bill to punish banks that discriminate against energy companies.


The muni market isn’t the biggest in the world, but it is significant. Texas is the third-biggest state for sales of long- and short-term bonds, commercial paper and municipal-backed corporate debt after California and New York, with more than $50 billion worth of sales in each of the past three years, more than 10% of all sales, according to Bloomberg data.

The law has upended debt sales since it came into effect last September: JPMorgan, for example, has gone from leading the league tables in 2020, to seeing its business cut in half last year and drying up almost entirely so far this year. Topping the Texas table instead is Royal Bank of Canada.

Citigroup’s involvement has also dropped dramatically, but a Texas legislator has still threatened further exclusion over its abortion policy. Republicans in Congress have called for all government contracts with Citi to be canceled, while Sen. Marco Rubio of Florida wants to cut all tax breaks from “woke corporations.”

With the threat of commercial damage, why would CEOs like Fraser risk backlash with public pronouncements on contentious issues? She could ensure staff are protected without saying it aloud.

First, Republicans and the banking industry have already been leaving each other behind, especially since the party has become more nativist, socially conservative and protectionist on trade, like right-wing groups in the U.K. and Europe.

Banks and bankers have changed too. They are large, reliable political donors who traditionally favored the fiscally conservative and economically laissez-faire GOP. But there has been a steady drift toward funding liberal politicians, according to Adam Bonica, associate professor of political science at Stanford University.


He maps the ideological leanings of industries by analyzing data on contributions and has found the same slow-moving trend among many since 1980. But it accelerated in recent years: In finance, ideology crossed the center line and then became rapidly more liberal in the targets of its funding after 2012.

Industries like agriculture and energy are among the few that remain more conservative.

But this still doesn’t tell us why or what is the value in advertising more progressive attitudes to the wider world? One answer is the economic heft of younger generations.

Millenials (aka Generation Y) and Generation Z, which combine all people born between 1981 and 2012, are a huge demographic force, especially in the U.S. The roughly 73 million millennial Americans have already overtaken Baby Boomers as a bigger share of the population. Hot on their heels, Gen-Z will become the biggest group, nearly 80 million, by 2034, according to a 2019 study of the coming youth boom by Morgan Stanley economists and analysts. Gen-Z is big in the U.S., accounting for 20% of the U.S. population, more than in other advanced country. In France and the U.K. they make up 17%-18% of the population while in many other places they are less than 15%.

The effect of these cohorts on the growth of the working population and the U.S. economy in the decades ahead is going to be much greater than official projections had assumed, Morgan Stanley found. That goes against the expectations of a slower economy brought on by the decline of boomers as active workers and consumers.

This, of course, matters greatly for banks. Millennials have driven the bulk of new loan demand in the U.S. since before 2019, according to Morgan Stanley. Plus, banks face more competition from fintechs to win the business and longer-term loyalty of Generations Y and Z: The young are predisposed to use smartphones for all kinds of finance. More than 60% of Gen-Zers had a smartphone before their 14th birthday.


Banks also must compete harder to recruit young people against their stronger aspirations to work in technology or health care. This is why banks such as Goldman Sachs are also bringing in an array of progressive benefits and why many are being forced to allow more flexible working.

The young and the college educated skew more liberal in their social views and in the current phase of this social-media age they often expect their employers and the brands they use to reflect their attitudes.

Banks’ commercial imperative must be to build brands and reputations among these two generations. It isn’t cynical to recognize the economic case whatever you think about the role a CEO like Fraser should or shouldn’t play publicly.

Wall Street’s leaders will find their roles at times uncomfortable, but it is the right path to follow.

Paul J. Davies is a Bloomberg Opinion columnist covering banking and finance.

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