As Major U.S. Banks Stop Funding Private Prisons, Companies Seek Money Abroad


Major banks—including Wells Fargo, SunTrust, Bank of America, BNP ParibasBarclays and Fifth Third Bankcorp—have announced they would stop financing private prison companies after reports of abusive and dangerous conditions in for-profit prisons and detention centers spurred public condemnation.

Federal investigators have found that private prisons fail to provide sufficient rehabilitative services, maintain adequate security, or save taxpayers money—and they reported higher rates of assault, more uses of force, and more contraband in private prison than in government facilities.

Huge profits from the warehousing of human beings create perverse incentives and hinder efforts to reform sentencing laws, emphasize rehabilitation goals, and reduce the prison population. Indeed, private prison contracts routinely include “lock-up quotas” that require state governments to maintain a minimum level of occupancy or pay a penalty for uninhabited beds, and private prison companies fund expensive lobbying efforts to influence state criminal policies.

In October, California banned private prisons and immigration detention centers to protect the health and safety of incarcerated people who have been treated as commodities by private prison operators, Assemblyman Rob Bonta, who carried the bill, told reporters. “We’re saying, ‘No more,’” Mr. Bonta said at a press conference. “No more inhumane treatment of individuals in for-profit, private facilities. No more profiteering on the backs of Californians.”

And lawmakers are calling on the federal government to investigate conditions and oversight for detainees at migrant detention centers after reports of inhumane treatment and images of children being held in cages provoked widespread public outcry.

States like Alabama nonetheless continue to seek private management of corrections. The two largest prison corporations in the country—CoreCivic and Geo Group—are among four companies moving forward in the process to build three new prisons in Alabama.

Alabama Political Reporter reports that CoreCivic is seeking a $250 million dollar loan from the Japanese financial firm Nomura Holdings Inc., after major U.S. banks cut ties with companies that run for-profit prisons. Without access to those banks, CoreCivic and Geo Group reportedly stand to lose 72% ($1.9 billion) of their current available financing.

Regional banks, including Birmingham-based Regions Bank, continue to provide financing to CoreCivic, according to APR. But APR reports that CoreCivic has been unable to secure the $250 million loan because investors are more focused today on social and political factors.