Mike Ludwig, Truthout, July 23, 2019
Major private prison firms CoreCivic and GEO Group stand to lose 72 percent — about $1.9 billion — of their private financing as major banks commit to divesting from the private prison industry under pressure from activists, according to a new analysis by the Center for Popular Democracy and other groups.
Activists have been pushing banks, pension funds, colleges, and city and state governments to divest from the private prison industry for years. However, the movement’s momentum has recently grown: Public outrage over Trump administration policies at the southern border has put mounting pressure on Wall Street to drop financial support for private companies that contract with Immigration and Customs Enforcement (ICE) to service and run a vast network of immigration jails and detention centers.
Private prison firms profit from human suffering and are known to cut corners in order to save money, practices that have created a long list of controversies at immigration jails as well as state and federal prisons, including lawsuits alleging labor trafficking of immigration detainees. Private prison firms are also beholden to investors and financiers, creating an array of public targets for activists.
As Trump has escalated his anti-immigrant policies, the prison divestment movement has become a broad coalition, connecting immigrant rights groups with the movement to end mass incarceration in the United States, which has long been driven by activists working at the intersection of human rights and racial justice. Kristin Rowe-Finkbeiner, executive director of the progressive action network MomsRising and a member of the Families Belong Together Corporate Accountability Committee, said more than 100 grassroots groups came together over the past few months to put pressure on the banks with petitions, protests and sit-ins, building on years of organizing by prison divestment activists.
So far this year, six major banks — JPMorgan Chase, Wells Fargo, Bank of America, SunTrust, BNP Paribas, and Fifth Third Bancorp — have made broad public commitments to no longer provide new financing to the private prison industry after current financial agreements expire. This divestment is expected to have a considerable impact on GEO Group and CoreCivic, which rely on loans and lines of credit to expand and stay afloat.
Both companies are set up as Real Estate Investment Trusts (REITs) that are exempt from corporate income taxes, an arrangement that has allowed the private prison industry to expand rapidly over the past two decades. However, REITs are required by law to pass large portions of their incomes back to investors, limiting the amount of cash they have on hand. So, in order to expand their operations while sustaining the business model based on the REIT tax loophole, companies like CoreCivic and GEO Group must rely on short-term loans and lines of credit, making Wall Street financing for private prison firms a crucial choke point of activists.
Several banks facing pressure to divest from private prison companies, including PNC Bank, Barclays and US Bank, have not committed publicly to divesting, according to the Center’s analysis. Moreover, those that have publicly said they would no longer finance private prison firms are not keeping their commitments equally. For example, Wells Fargo and JPMorgan Chase have already canceled credit lines for GEO Group, while Bank of America extended an additional $90 million revolving credit line to the company shortly before announcing that it would no longer offer new financing to the industry.
It’s also unclear what portions of the sprawling private prison industry the banks will no longer finance. Bank of America officials made its divestment announcement after touring the Homestead center, a privately run migrant “influx center” in Miami that human rights groups say is really a detention center where children are held for long periods of time in grueling conditions and are unable to leave. Caliburn, the private company behind Homestead, does not expect to be impacted by Bank of America’s decision because it is not technically a private prison, according to reports.
GEO Group has also attempted to distance itself from the controversies surrounding the separation of families and detention of migrant children, telling media outlets that it does not manage facilities that house unaccompanied minors or those under control of the Border Patrol.
Even if the banks were to divest entirely from companies that run private prisons, that wouldn’t necessarily mean no more profiting from incarceration. The nation’s sprawling system of incarceration is full of for-profit companies, including within public prisons: Contractors may provide everything from medical care to food and phone calls home.
Carrillo said activists should make demands beyond divestment from prison profiteers and remember that it’s not enough to simply call for an ICE or Border Patrol detention facility to be shut down. GEO Group and other companies are heavily invested in “alternatives” to incarceration like ankle monitors and facial recognition technology that can extend the system of control and incarceration beyond the walls of a jail or detention center.