top of page

Texas has become a hub for the financial services industry. Let’s keep it that way

This article by TAB CEO Glenn Hamer was published by Dallas Morning News. Photo by Getty Images.

Thanks to the dynamic, pro-business climate cultivated by Gov. Greg Abbott and our state leaders, Texas is experiencing a record-breaking streak of economic growth, job creation, business expansion and corporate relocations. Because of this incredible success, Texas is now witnessing a renaissance in the financial services sector, adding gravity to the Lone Star State in a universe once dominated by states like New York and Illinois.

Dallas, in particular, is leading the nation in financial services job growth with more than 32,000 new jobs created in the sector since 2019 alone. Today, only New York City has more financial services jobs.

While other states and localities institute burdens that are driving financial firms and their employees away, Texas is ready to welcome them with open arms — along with no state income tax, a lower cost of living, robust workforce development and educational opportunities, and a common-sense regulatory environment.

As financial giants like JPMorgan, Capital One, Goldman Sachs, Wells Fargo and Bank of America expand and set up shop in Texas, it’s critical that our state’s leaders reinforce the pro-business, small government policies that attract investment and create high-quality, high-paying jobs for our state’s world-class workforce. However, with the potential that financial services firms may be banned from underwriting bonds in Texas due to enforcement of state law targeting corporate governance policies, one of the key features of our state’s economy that has driven more financial services firms here — a robust and competitive bond market — could be at risk, and the cost to Texans would be severe.

In fact, a study published last year by researchers at the University of Pennsylvania and the Federal Reserve found that reduced competition in the bond market could cost state and local governments in Texas up to $416 million annually in higher interest costs — a burden that ultimately falls on Texas taxpayers and businesses.

Last month, a new attorney general’s office advisory was issued indicating that the state is prepared to ban financial institutions with certain corporate governance policies from contracting with public entities in Texas. If the state cancels a deal, the local governments would have to restart the borrowing process.

Just last week, two major banks were dropped from underwriting municipal bond deals, and more may follow as further enforcement actions are announced. As one public finance expert put it: “Like any other market, if you have fewer bankers or banks to service our issuers, you should suspect that it may cost our Texas issuers more to sell bonds.”

Lawmakers rightly took advantage of Texas’ historic budget surplus this year to pass an $18 billion property tax cut — the largest in the state’s history. This important work to deliver relief to Texas families and businesses would undoubtedly be compromised if we fail to maintain the regulatory posture that encourages competition in the bond market for local governmental entities like municipalities, school districts, and utility districts.

When local government entities hold bond elections to approve financing for municipal projects and services, such as building bridges, schools or hospitals, taxpayers expect to get the best deal on their investment, and that requires competition among the financiers of those bonds. For example, earlier this year, an auction by the city of Frisco was decided by 0.05% of a true interest cost on a municipal bond deal. Without healthy competition in the bond market, taxpayers would be saddled with unnecessary additional debt that diminishes the affordability and quality of life our communities need to maintain our state’s unbridled economic expansion. As business leaders in Texas understand, competition drives down costs. By contrast, anything government does to reduce competition will drive up costs and undermine our state’s ability to continue offering an affordable cost of living.

As our population continues to grow, so too does the municipal bond market. A recent analysis of population moving trends projects Texas to be the most populous state by the year 2100, if not sooner. It is clear that the future belongs to Texas, so long as we continue to promote the principles of limited government intervention and free enterprise that have made us an unrivaled economic powerhouse. I trust that our state leaders will continue to keep these principles front and center as we move forward in what is quickly becoming the Texas Century.


bottom of page