This is wonderful news. See so many articles on my website, under “prison abuse”, explaining why private prisons are awful and a WASTE of YOUR money. PRAY that private prisons become extinct soon!
Excerpts from the Article:
All of the publicly known existing banking partners providing lines of credit and term loans to private prison leader GEO Group have now officially committed to ending ties with the private prison and immigrant detention industry. These banks are JPMorgan Chase, Wells Fargo, Bank of America, BNP Paribas, SunTrust, and Barclays. Fifth Third Bank and PNC have additionally made commitments to stop providing financing to the private prison industry as a whole.
This exodus comes in the wake of demands by grassroots activists — many under the banner of the #FamiliesBelongTogether coalition — shareholders, policymakers, and investors. Major banks supporting the private prisons behind mass incarceration and immigrant detention have now committed to not renew an estimated $2.4B in credit lines and term loans to industry giants GEO Group and CoreCivic once their current facilities expire.
This shift represents an estimated shortfall of 87.4% of all credit and term loans to the industry, which depends on these instruments to finance their day to day operations. Together, these banks commitments — alongside a federal judge’s block on the Trump administration’s plans to expand family detention this weekend, new policy initiatives such as California ending all contracts with private prisons, and Democratic primary candidates publicly raising the idea of a federal ban on for-profit incarceration — lead many to speculate a threat to the survival of the private prison industry all together.
Five banks have not yet made the commitment to stop extending their credit lines and term loans to CoreCivic: Regions (headquartered in Birmingham, AL), Citizens (Providence, Rhode Island), Pinnacle Bank (Nashville, TN), First Tennessee Bank (Memphis, TN), and Synovus Bank (Columbus, GA). In response to an inquiry, Pinnacle President and CEO Terry Turner said “while we don’t discuss details of client relationships, we base commercial credit decisions on several factors.
Even with these remaining partners still at the table, international credit rating agency Fitch downgraded CoreCivic from stable to negative, and stock prices for both companies now near historic lows. The one year returns to investors for both GEO Group and CoreCivic are down nearly 30%, which classifies them as significantly underperforming when compared to other entities in their investment class of US Real Estate Investment Trusts (a designation that initially allowed private prisons to reap major tax benefits).
As a brief historical recap: the American private prison industry is a relatively new phenomenon, with the first private prison opening in 1984. Given their business model depends on keeping a consistent and increasing number of people incarcerated, it’s been speculated and critiqued that this is why GEO Group and CoreCivic have spent $25M on lobbying over the past three decades. Disclosures show they’ve lobbied on a number of bills related to funding for ICE enforcement over the years. Both GEO Group and CoreCivic say that they don’t lobby on legislation or policies that would affect the basis for or length of incarceration or detention, but according to the Justice Policy Institute, both companies have served on task forces of the American Legislative Exchange Council (ALEC), which has written and promoted model legislation focused on mandatory minimums sentences, three strikes laws, and “truth in sentencing” legislation.
Banks are only one piece of the wider financial lives of private prison companies, which include share ownership, bond underwriting, the purchase of bonds, and others. Still, in the wake of reputational risk and falling share prices, it is questionable at best if new partners will take the leap to join GEO Group and CoreCivic in business and fill their potential financing gaps. In addition to the #FamiliesBelongTogether coalition representing over 10 million people nationwide, asset owners and managers of the Interfaith Center on Corporate Responsibility and the Confluence Philanthropy network, representing over $2B in AUM, added their voices to a public letter demanding that banks stop financing the private prison industry. Among others, these signatories include the Akonadi Foundation, Edward W. Hazen Foundation, Mary Reynolds Babcock Foundation, Libra Foundation, Zevin Asset Management, and Veris Wealth Partners. Investors are increasingly asking about, and when possible avoiding, other exposures they have to the industry beyond banks.