Wells Fargo Bankrolls Private Prison Companies, Immigrant Detention
While Wells Fargo & Company has sold off much of the stock it once owned in private prison company GEO Group amid a divestment campaign targeting the multi-billion-dollar bank, it has concurrently increased its shares in Corrections Corporation of America (CCA).
After initially selling off around 33% of its holdings in GEO Group stock in 2012, Wells Fargo continued to divest from GEO in the mutual funds it controlled. As of June 30, 2014, the bank owned 7,425 shares of GEO valued at over $272,000; previously, it had owned 4 million shares. However, Wells Fargo has steadily increased its stake in CCA and owned 1.08 million shares in the company valued at $36.6 million as of June 30, 2014.
Peter Cervantes-Gautschi, executive director of Enlace, a non-profit organization that has convened a National Private Prison Divestment Campaign, congratulated the bank on “its well-advised decision to dump the private prison stock” in GEO Group. He called on the financial industry giant to “rid itself of the rest of its private prison holdings and to cease financing private prison companies.”
A divestment campaign protest outside a Wells Fargo branch in Nashville, Tennessee on July 1, 2011 involved a sidewalk demonstration and participants closing their accounts at the bank, including PLN managing editor Alex Friedmann. Similar protests were held in at least 13 other cities.
A September 2012 report issued by two watchdog groups identified Wells Fargo as the “issuing lender” on CCA’s $785 million line of credit and the bookkeeper for $300 million of GEO Group’s corporate debt. The joint report, by National People’s Action and the Public Accountability Initiative, also noted that Management and Training Corporation (MTC), the nation’s third-largest private prison firm, borrows money from Wells Fargo.
The report argued that with those millions in loans and investments, private prison companies are able to shape immigration policy by influencing lawmakers – e.g., through political lobbying and campaign donations.
Both GEO Group and CCA operate immigrant detention facilities. According to filings with the Securities and Exchange Commission, the companies rely heavily on revenue from detention contracts with Immigration and Customs Enforcement (ICE).
“As a major investor in and lender to the private prison industry, Wells Fargo is at the center of the industry’s vicious cycle,” the report stated. “This cycle involves profiting from the detention of vulnerable immigrant communities by understaffing the prisons and cutting costs so that basic food and medical needs are not met.” If the bank withdrew its support, “this cycle would break down.”
Wells Fargo disputed the report’s findings, however, and defended its lending practices by claiming that it’s just one of several banks – acting on behalf of third-party investors – that do business with CCA, GEO and MTC. Other major institutional investors in GEO Group include Credit Suisse, Vanguard Group, Eagle Asset Management, FMR, Ameriprise Financial and State Street.
Further, the bank argued that it owned private prison stock through its mutual funds, not directly. According to Wells Fargo spokesman Alan Elias, fund managers “must make investment decisions for the benefit of investors and independent of the interests of Wells Fargo Bank.” In an email sent to Progress Illinois, Elias explained that, by law, mutual funds are “segregated” from Wells Fargo’s own assets; thus, it has no personal stake in the for-profit prison industry.
The bank’s website goes further in defending its position on human rights, stating: “Wells Fargo recognizes that governments have the duty to protect human rights, and our company has a responsibility to respect human rights. To that end, we strive to respect human rights throughout our operations, products and services.”
Ironically, Wells Fargo has targeted Hispanics as new bank customers at the same time it provides financial services to and invests in private prison companies that operate immigration detention centers.
“Wells Fargo invests a lot of money in marketing to the Latino communities,” noted Nicole Melaku with Rights for All People, an immigrant-rights organization. “But the investment in the GEO Group has all sorts of conflicts of values for a company that prides itself on integrity.”
Kevin Connor, director of the Public Accountability Initiative, said Wells Fargo is the only major bank with strong ties to the three largest private prison companies. He also challenged the bank’s willingness to do business with them.
“From any sort of moral and ethical perspective, supplying critical financing to this industry is wrong,” Connor stated. “If you look at Wells Fargo’s own marketing materials, they claim to be responsible in their business practices. [But] this is clearly an irresponsible use of their customers’ money.”
The joint watchdog report also documented abuses inside private prisons, the industry’s negative impact on the U.S. economy and Wells Fargo’s past responses to community pressure. In 1977, for example, the bank loaned millions to the South African government despite its egregious practice of apartheid. It took seven years before Wells Fargo succumbed to protests and refused to renew or make new loans to South Africa until apartheid ended.
Sources: Progress Illinois; “Jails Fargo: Banking on Immigrant Detention,” National People’s Action/Public Accountability Initiative (September 2012); www.wellsfargo.com; www.ccjc.org; www.mffais.com; National Private Prison Divestment Campaign; www.pcasc.net; Westword; www.truth-out.org
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