The Politics of Credit

Oct 7, 2010
It's warm-getting-cool and the leaves are changing. The smells of Fall are in the air. Hunting seasons are on or soon here and it's the hunting industry's time of the year. While I'm aware of Spring turkey seasons and such, Fall is harvest time on more than one level.

The Warne Scope Mounts Company of Oregon was doing business - the manufacture of scope mounts and components thereof. They've had some exciting products out recently, including one I'll be putting to the test soon. While in the process of doing business, Charles Lake, President of Warne Scope Mounts, submitted an application from the company for a business line of credit to purchase materials to make work benches as well as to purchase appliances, to the Home Depot. Nothing Home Depot sells Warne is used in their products.

The credit line was approved on September 28. On the 29th, Mr. Lake received a call from the Home Depot credit department saying the line of credit was rescinded. He asked if it was something in the company's credit rating. "No," he was told. "It's because of the industry you are in."

Mr. Lake asked for the specific problem as Warne just makes parts, not guns or ammo. According to Mr. Wilcox, a Company VP, the response was, "You make parts for the gun industry."

Mr. Lake had his office manager called the national credit department to ask about the rescission. He was told that is their policy.

A letter, dated September 30, 2010, was received October 4. It confirmed that the "account was opened in error . . ." going on to say, "Our policy restricts us from lending to businesses in your industry." Oddly, a disclaimer appears at the base of the letter, saying that federal law prohibits discrimination in lending "on the basis of race, color, religion, national origin, sex, marital status, age; because all or part of the applicant's income derives from any public assistance program . . ." The letter was from Home Depot Credit Services, Citibank (South Dakota), N.A., Creditor.

Warne Scope Mounts makes scope mounts and associated hardware. They don't make firearms, ammunition, magazines, barrels, bolts, sling swivels, springs or anything else. Founded in 1991, Warne employs approximately 50 people who are involved in manufacture and shipping of the several hundred thousand mount sets that are sold per year. A considerable part of their business is OEM for many of the top industry rifle and scope companies.

On October 5, I had email contact with Mr. Stephen Holmes, Senior Manager of Corporate Communications for Home Depot. He said Home Depot had "(n)o such policy" and that the company doesn't "actually manage all the backend parts of the card."

Later, I received another message from Mr. Holmes. He stated that Citi's rules apply to all of the retailers that carry their private label credit card, not just The Home Depot accounts. "As such," he wrote, "we have absolutely no input on the criteria they use to assess credit risk or credit worthiness."

I contacted Citi's media wing to attempt to get their side of the story. Elizabeth Fogarty, Citi Public Affairs answered with the following prepared statement:

"Citi does not prohibit the financing of firearms purchases by individuals nor the financing of businesses that manufacture and sell them to individuals for recreational use. However, we do prohibit financing merchants in the non-ancillary military equipment industry, including the financing of businesses that manufacture and or sell firearms for military use. While we do not discuss individual credit applications, we are always open to reviewing particular decisions when appropriate to ensure the policy is applied correctly."

Unfamiliar with the term "non-ancillary military equipment," I asked for clarification. The response was that "the policy prohibits financing businesses that manufacture and/or sell firearms for military use."

Somehow, I feel the story doesn't end here. As always, we'll keep you posted.

--Rich Grassi

Grassi is editor of The Tactical Wire

EDITOR'S NOTE: Does a policy that prohibits financing businesses that manufacture and/or sell firearms for military use" mean that Citi wouldn't extend credit to Smith & Wesson, Remington, Winchester, Federal, or any of the many other companies in the firearms industry? We'll find out - and let you know.