Web Only / Features » March 14, 2019
The Private Prison Divestment Movement Just Had an Incredible Week
Activists are stopping banks like JPMorgan Chase and Wells Fargo from financing the caging of migrant children. Here’s how.
“We had a cultural shift around how people view migrants and refugees, and how people connect with basic values.”
The past week has seen real progress for the campaign to curb the private prison industry. A years-long effort targeting big banks that profit from incarceration and immigrant detention—which took on new resonance after the cruelties of the Trump administration’s family separation policies came to light—has yielded what, from the outside, may look like an overnight success.
“My initial reaction was disbelief,” says Ana Maria Archila of the Center for Popular Democracy, a leading group in the anti-private prison movement. “There were so many points where we were like, let’s just stop, we’re getting nowhere. But the pressure worked.”
Last Tuesday, JPMorgan Chase, which has provided at least $254 million in debt financing to two private prison giants, CoreCivic and Geo Group, cut off that money spigot, stating “we will no longer bank the private prison industry.” By Sunday, U.S. Bank told the Washington Post that it had reduced its credit exposure to CoreCivic and Geo Group to “an immaterial amount.” And in congressional testimony this Tuesday, Wells Fargo CEO Tim Sloan, under questioning from Rep. Alexandria Ocasio-Cortez (D-NY), said, “we made a decision two years ago to exit the two relationships that we had with two private prison firms.”
According to Wells Fargo spokesperson Jennifer Dunn, the bank has fully exited its credit agreement with CoreCivic, and plans to exit the agreement with Geo Group as soon as it amortizes and matures. Dunn gave no timeline for that exit. Wells Fargo had telegraphed this reduction in lending to private prisons in a business standards report it released in January.
JPMorgan, Wells Fargo and U.S. Bank are three of the six banks that, according to a 2016 report from the anti-privatization group In The Public Interest, provide most of the financing that allows the private prison industry to survive (the other three are Bank of America, SunTrust and BNP Paribas; subsequent securities filings show participation by PNC Bank, Citizens Bank and Regions Bank). Because CoreCivic and Geo Group are structured as real estate companies for the purposes of taking tax deductions, they require constant infusions of capital to satisfy cash flow and continue growth.
Migrant rights activists have been organizing against private prisons since the companies started to pivot to immigration services during the Obama administration. Over two-thirds of all migrants under detention sleep in private prison-operated beds, and in 2017, CoreCivic and Geo Group earned nearly $1 billion from ICE contracts alone.
This advocacy helped lead Obama’s Justice Department to phase out private prisons from federal incarceration, although it pointedly did not address immigrant detention. But President Trump, who received hundreds of thousands of dollars in donations from the private prison industry for his 2016 campaign and inauguration festivities, brought them off the mat.
The Center for Popular Democracy and several immigration groups initiated the “Corporate Backers of Hate” campaign in May 2017, targeting corporations that profited off of the Trump agenda, including through immigration enforcement. “The initial inspiration was to really shame the companies providing cover and legitimizing him,” says Archila.
The campaign quickly saw an opening to highlight Wall Street’s role in facilitating Trump’s anti-immigrant policies. Research organizations like In The Public Interest and Little Sis, which specializes in tracking corporate financing, detailed the private prison industry’s reliance on large investors, with a debt load that reached $1.8 billion in 2018. Crowd-sourced activists also pitched in to follow the money. “We thought it would be important to show not only the moral standpoint but the fiduciary standpoint,” says Javier Valdes of Make the Road New York, another core organization in the campaign.
Organizations tracked the financial flows in real time, and worked with investment advisors to get a picture of how divestment could work. “If you have access to a Bloomberg terminal, you can get minute-by-minute data,” said Matt Nelson of Presente, which has been involved in private prison divestment for years. “It’s important to have the finance expertise to be able to say, the banks can easily put the private prison industry on a no-buy list.”
The research gave a factual underpinning to the pressure campaign. And consumer-facing banks that have publicly stated support for diversity and identity seemed a natural target—in particular two of the biggest: JPMorgan Chase and Wells Fargo.
The campaign included civil disobedience in front of JPMorgan CEO Jamie Dimon’s house, once playing the cries of children in detention over a loudspeaker, another featuring a mariachi band serenading Dimon on Valentine’s Day to “break up” with the private prison industry. At JPMorgan HQ in New York, activists left shoes to symbolize migrants detained and deported. Archila attended two JPMorgan shareholder meetings, accompanied by former detainees who challenged Dimon to live up to his rhetoric. “We were concerned that he was speaking out of both sides of his mouth, speaking out against Trump policy, but profiting on the back end,” says Javier Valdes.
When the child separation horrors reached a crescendo in summer 2018, the Families Belong Together coalition of over 100 organizations made private prison divestment a major focus of its campaign, adding significant energy and manpower to the existing movement. They initiated digital petitions, with hundreds of thousands of people demanding divestment. Behind the scenes, groups worked with municipal governments and public pension funds, educating them on what their money was funding. Public employee funds in New York State, New York City and Philadelphia dropped their investments with the industry.
The turnover in power in Congress played a role as well. When Ocasio-Cortez attended an organizing meeting of movement leaders and promised to hold hearings on banks’ role in funding private prisons, it had a major impact. “She has this microphone, and anything she says gets attention,” Archila says.
Archila added that, while the movement never figured out who inside the banks was responsible for decision-making on divestment, they knew their work was having an impact. “We learned it was rattling them, that they were evaluating their investment,” she says.
Still, no accountability campaign members received advance notice about JPMorgan Chase’s divestment announcement; they found out about it from a report in Reuters. “It speaks to cultures changing and consciousness increasing,” says Presente’s Matt Nelson. “We had a cultural shift around how people view migrants and refugees, and how people connect with basic values.”
While activists are celebrating the announcements around divestment, they are taking a “trust but verify” approach. Wells Fargo hasn’t set a firm date for its Geo Group divestment, and the banks made no commitment to stay out of industry financing for the long-term. JPMorgan recently underwrote a $159.5 million private placement for CoreCivic to build a prison in Kansas. And any lender can step in and replace the banks who dropped private prison firms.
Valdes, of Make the Road New York, said that his organization would stand ready to make life miserable for replacement lenders: “They will feel our wrath.” Of course, the only real way to choke off funding for private prison immigration detention is to halt the $1 billion in government funding that supports it. That’s a longer-term project.
But the divestment success does help expose Geo Group and CoreCivic. Having big banks disassociate with them eats away at their legitimacy. Well Fargo CEO Tim Sloan likely doesn’t want Ocasio-Cortez asking him “why was the bank involved with the caging of children,” as she did on Tuesday, ever again. And that leaves the private prison duopoly out on an island. The market seems to be taking notice: Stock prices in Geo Group and CoreCivic have plummeted significantly in the past week.
The success around private prison divestment also speaks to the new paradigm of organizing in the Trump era. “I am heartened by the inspiring shift around our political imagination,” Nelson says. “People want to be involved in deeper structural change that aligns with their values and human rights. That’s what’s going to get us through these perilous times.”
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David Dayen is an investigative fellow with In These Times' Leonard C. Goodman Institute for Investigative Reporting. His book Chain of Title: How Three Ordinary Americans Uncovered Wall Street's Great Foreclosure Fraud won the 2015 Studs and Ida Terkel Prize. He lives in Los Angeles, where prior to writing about politics he had a 19-year career as a television producer and editor.
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