Bank of America Cuts Business Ties With Detention Centers, Private Prisons
By Taylor Telford & Renae Merle, The Washington Post
Bank of America will cease lending to detention centers and private prisons, making it one of the last big Wall Street bankers to cut ties with the industry as corporations wrestle with whether to cash in on President Trump’s immigration policies or create distance amid increasing public backlash.
“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,” Bank of America said in a statement to The Washington Post. “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.”
Dropping private prison companies is a way for banks, already targets of Democratic presidential candidates, to get out of the crossfire on another emotional issue, industry analysts have said. JPMorgan Chase and Wells Fargo made similar moves earlier this year, and U.S. Bank told The Post in March that it, too, was pulling back.
Banks have been conducting a cost-benefit analysis on whether the relatively small fees drawn from the prison industry are worth the political headache and potential reputational hit, said Ed Mills, a Washington-based policy analyst with Raymond James. The calculus changed after Democrats took control of the House in 2018, elevating Rep. Maxine Waters (D-Calif.) to the chair of the powerful Financial Services Committee where progressive lightening rod, Rep. Alexandria Ocasio-Cortez (D-N.Y.), also serves, he said. No “big bank CEO wants to go in front of Congress and have to explain why their bank is financing something politically controversial,” Mills said. “The banking fee is not worth the risk.”
The moves also come as big banks post record profits and the Trump administration rolls back regulations put in place after the global financial crisis. In 2018, Bank of America reported profit of $28.1 billion — an all-time high and 56 percent higher than the $18 billion recorded the year before. Its chief executive, Brian Moynihan, made $26.5 million last year.
Though the announcement comes at a time of heightened tensions over the treatment of migrants in U.S. detention centers, with activists demanding more accountability from the companies that profit off them, Bank of America’s decision has been in the works for some time. Its representatives spent months consulting with civil rights leaders, criminal justice experts and academics, and toured prison and detention facilities before deciding it was in the bank’s best interest to end its relationships with these companies “as expeditiously as possible.”
Shares of private prison giants GEO Group and CoreCivic — to which Bank of America also served as a chief financier — saw their shares sink more than 4 percent after the lender’s announcement.