Bank of America (BAC) will stop financing companies providing prisoner and immigrant detention services for federal and state governments “as expeditiously as possible," a bank spokesperson told Yahoo Finance.
CoreCivic (CXW) and The GEO Group (GEO), the two dominant players in the private prison space, have previously borrowed money from Bank of America, JPMorgan Chase, and Wells Fargo.
JPMorgan Chase (JPM) ended its relationship with the private prison business back in March, Reuters reported. Wells Fargo (WFC) said in its business standards report published in January that the bank's credit exposure to private prison companies "has significantly decreased and is expected to continue to decline." Wells Fargo added that it's "not actively marketing to that sector."
The issue of Bank of America’s business dealings with private prisons surfaced at the bank’s annual meeting of stockholders in late April. At the time, Bank of America’s leadership acknowledged that it’s a “highly emotional issue” and that they were “extremely engaged in the conversation,” especially through the firm’s environmental social governance (ESG) committee.
“Ultimately, policymakers are going to have to take on the criminal justice issue more broadly as well as immigration reform,” one of the executives said at the annual meeting. “While that’s happening, we are engaged in the due diligence through the risk framework and through extreme extensive engagement with stakeholders.”
Since that time, Bank of America has met with academics, criminal justice experts, special interest groups, and civil rights leaders. The firm also toured some of these facilities and had “intensive engagement” with the "limited number of clients" the firm has providing those private prison services.
“We appreciate steps they have taken to properly execute their contractual and humanitarian responsibilities, including seeking the counsel of civil rights leaders and legal advocates,” the bank spokesperson said in the statement.
Bank of America added that the private sector “is attempting to respond to public policy and government needs and demands in the absence of long standing and widely recognized reforms needed in criminal justice and immigration policies.”
But after discussing the issue for some time, the bank decided it was best stop to doing business with private prisons.
“Lacking further legal and policy clarity, and in recognition of the concerns of our employees and stakeholders in the communities we serve, it is our intention to exit these relationships,” the spokesperson said.
In a statement, GEO Group CEO George Zoley said Bank of America's decision to cut off financing would result in "no impact" to its revolving credit facility, which remains at $900 million.
Zoley added that GEO Group's centers "are not overcrowded and comply with performance-based standards, which were first established under President Barack Obama’s administration."
Zoley continued: "These modern Processing Centers provide safe and humane residential care, high quality medical services, and enhanced amenities including artificial turf soccer fields, flat screen TVs in living areas, indoor and outdoor recreation, classrooms, multipurpose rooms, and libraries."
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Julia La Roche is a finance reporter at Yahoo Finance. Follow her on Twitter.
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