Prisons cost a lot of money to operate. The government may be pushing funds into public prisons to keep them open, but banks are also major investors in the prison industrial system. Huge banks have donated millions of dollars to GEO Group, Inc. and CoreCivic, two of the largest prison companies in the country. Ever since mass incarceration became a big business, large banks have been making deals with these prison companies to pay off the debts calculated from their operation.
These banks act as financiers of prison businesses by giving them business credit, loans and bonds. Although GEO Group and CoreCivic, formerly known as the Corrections Corporation of America (CCA), make millions of dollars through government contracts, both have an estimated total debt of over $2 billion. Most of the debt comes from the acquisition of several companies for GEO Group and CoreCivic that provide prison services, such as management of reentry centers and electronic monitoring of those released from prison. Banks then swoop in and offer financial relief, charging interest and fees to gain a profit.
Large bank corporations have also struck deals with these prison companies to be the main connection between those released from prison and the money given to them by loved ones. According to a 2013 U.S. Treasury document obtained by the Center for Public Integrity, major banks scored a deal to be the issuer of debit cards to those released from prison. These debit cards come with high fees, where the cost of withdrawing money starts at $2.
Their hands have also extended to detention camps operated by the Immigration and Customs Enforcement (ICE). After the separation of families in detention camps became widely known, banks began to feel pressure from activists who placed their involvement with prisons in full view. Since 2016, major banks have pledged to withdraw their money from GEO Group and CoreCivic, who also run detention camps. This includes not renewing contracts for credit and loans, which will result in an estimated financial decline of 87%. Here are the banks that are pulling their funds from private prisons:
If any bank is at the front of the line when it comes to funding private prisons, it’s Wells Fargo. They have been a longtime client of GEO Group and CoreCivic, especially when it came to selling bonds. Since GEO Group and CCA are publicly traded companies, Wells Fargo is a huge investor, owning over 1.2 million shares in both prison companies, according to a 2016 Securities and Exchange Commission filing. Their recent divestment from both prison companies will be a major blow to their stock and a huge win for activists.
The Atlanta-based bank released a statement in July that expressed their reasons behind their divestment from GEO Group and CoreCivic.
“This decision was made after extensive consideration of the views of our stakeholders on this deeply complex issue,” SunTrust said in a statement.
SunTrust Banks is currently merging with BB&T Corp. and saw a 0.7% fall in shares after the announcement.
JP Morgan Chase
After public protests by immigration activists outside of their headquarters in New York, the bank announced in March that it will “no longer bank the private prison industry.” JP Morgan Chase & Company is the largest bank in the United States due to assets, with loan deals worth up to $354 billion in many industries. According to Reuters, lending to prison companies accounted for a small chunk of their business.
Barclays has been a major partner of GEO Group since 2001. The bank announced in late July that it will no longer enter any new agreements with the prison company. They are, however, allowing GEO Group’s credit facility to run its course, which will expire in 2024. Barclays’ former CEO, John Varlay, underwent a trial for fraud linked to the 2008 financial crisis and was recently acquitted.
Even with political pressure, it took some time for PNC to respond to July protests from immigration activists. The bank later announced in August that it will withdraw from funding CoreCivic.
“PNC has been considering issues related to lending to the private prison space for some time,” Marcey Zwiebel, PNC’s Director of Corporate Public Relations, said in a statement. “As a result, PNC’s exposure to the industry is small. As we consider new questions about the industry, we will not extend any additional credit to companies operating private prisons.”
According to Forbes, PNC gave CoreCivic $112 million in credit and a $28 million loan.
Bank of America
In June, Bank of America announced its withdrawal from financing private prisons a day after its officials toured a detention camp that the bank was funding. The Homestead Detention Center imprisoned over 3,000 migrant teens and was run by Caliburn, a detention company that Bank of America gave a $75 million credit and a loan of $380 million.
This French bank was the fifth to back out of financing prison companies. BNP Paribas established itself in the United States with its subsidiary, Bank of the West, which is the eighth-largest bank in the world. The bank gave GEO Group $1.7 billion in 2017 and was named “the best bank in the world for sustainable finance” in 2018.
Fifth Third BanCorp
Although the bank did not disclose how much investment they have in private prisons, it announced in July that it will no longer be participating in their finance. In its statement, the bank says that its decision was “discussed…with our few clients in the space” and insinuated that the private prison companies took steps to address the concerns of stakeholders. It will still honor previous financial commitments with CoreCivic.
Thanks to the political action of immigration and undocumented activists, the largest banks in the country and in the world have bowed out of placing millions of dollars into the industrial prison system. Many of the banks have not acknowledged the pressure brought to them by the protests but expressed in statements that their decision has come out of concerns for their stakeholders. Rich people have been contributing to mass incarceration and waited until the public eye held them accountable to pull their money out. Although GEO Group and CoreCivic are facing major declines in their stocks, there’s still work to be done to undercut their operations entirely.