A day after company officials toured the Homestead detention center for unaccompanied immigrant teenagers, Bank of America decided it will pull out of the private prison and detention industry.
The banking giant’s decision to withhold credit from facilities like the one in Homestead — which houses roughly 3,000 migrant teens — comes after company officials visited the property on Tuesday, sources told the Miami Herald. The bank would not confirm a visit to the facility.
In late May, the Miami Herald revealed that Bank of America is the chief financier of Caliburn, the Homestead center’s operator.
On Wednesday, Bank of America confirmed that it will no longer be lending money to companies that run private prisons and detention centers, saying it has been “discussing this issue for some time.”
“We have decided to exit the relationships we have with companies providing prisoner and immigrant detention services for federal and state governments, as expeditiously as possible,” a Bank of America spokeswoman told the Miami Herald in an email. “We have had intensive engagement with the limited number of clients we have that are providing these services. We appreciate steps they have taken to properly execute their contractual and humanitarian responsibilities.”
Bank of America joins other major banks like Wells Fargo and JPMorgan Chase, which in late March announced they would sever ties with the private prison industry — specifically GEO Group and CoreCivic, the largest operators of private prisons and detention centers in the country — because it was a “risk” to their business following national outrage over private companies profiting off the detainment of people and children.
“Public resistance to the use of public-private partnerships for correctional, detention and community-based facilities could result in our inability to obtain new contracts or the loss of existing contracts, impact our ability to obtain or refinance debt financing or enter into commercial arrangements, which could have a material adverse effect on our business, financial condition and results of operations,” GEO Group wrote at the time.
Up until now, Bank of America, based in Charlotte, N.C., was the last Wall Street bank funding the industry, records show.
In a statement Wednesday night, Caliburn told the Miami Herald that Bank of America’s decision to phase out the financing of companies which operate private prison and detention facilities doesn’t affect the company or its Homestead facility.
“Bank of America has announced that it will phase out the financing of companies which operate private prison and detention facilities. To be clear, that is not the business Caliburn is in and their decision has no impact on the Company,” the statement said.
But sources inside Bank of America said earlier Wednesday that the institution considers the Homestead shelter a private detention facility. Bank officials would not comment on Caliburn’s statement Wednesday evening.
According to documents filed in August with the Securities and Exchange Commission, Bank of America provided a $380 million loan for Caliburn, the company that runs the Homestead center under a U.S. government contract, as well as a $75 million revolving credit line.
A number of both big and small banks still provide more than $2.6 billion in credit to the industry, according to a recent report released by three research watchdog groups: In The Public Interest, Public Accountability Initiative and the Center for Popular Democracy.
One of them is Atlanta-based SunTrust. SunTrust would not comment on whether it will continue financing the private prison industry but said in May “it has relationships with a wide variety of corporate clients, and we review those relationships thoughtfully.”
Critics of the Homestead detention center for unaccompanied migrant children have condemned the practice of separating children from their families and then detaining them in “prison-like conditions.” Some opponents of the Homestead facility have sought to shame financial backers into withholding credit for the private operators.
Caliburn did not immediately respond to emails from the Miami Herald Wednesday but issued a statement Tuesday in response to U.S. Sen. Elizabeth Warren’s statements that the Homestead shelter is a “prison.”
“We operate temporary emergency shelters, not private prisons or detention centers,” the statement said. “Those who suggest otherwise are intentionally creating a false and deceptive description to mislead the public and score political points.”
Kevin Connor, director of the Public Accountability Initiative, a watchdog research group that recently co-published a data briefing titled “The Wall Street banks still financing private prisons” said Wednesday’s announcement is a “major victory for grassroots efforts.”
“It’s a testament to the power of people organizing to put pressure on these companies to stop profiting from this industry. It’s a major milestone in that this is the first lead lender to one of the private prison companies, CoreCivic, to commit to ending financing entirely. It was also the lead lender to Caliburn.”
The Families Belong Together Corporate Accountability Committee, a coalition of organizations opposing family separation, said the move was an accomplishment “for the more than 100 organizations who have raised their voices, signed petitions, and protested at bank branches across the country to demand an end to financing the morally bankrupt private prison industry.”
“We applaud Bank of America for this decision as we commit to holding them accountable, and we will also ramp up the pressure on other big banks like SunTrust to exit the private prison industry,” the organization told the Miami Herald.
The banking giants provided loans and other financing agreements that keep the private prison and detention industry operating.
Private prison and detention operators depend on the banks for financing to support their day-to-day operations while securing additional government contracts. Then those contracts are used to pay off the banks.
As a result, the banking institutions receive millions of dollars in interest and fees from the facilities.
In April, the Miami Herald revealed that the U.S. Department of Health and Human Services had awarded Caliburn’s subsidiary a no-bid $341 million contract and that John Kelly, President Donald Trump’s former chief of staff and former head of the Department of Homeland Security, joined the board of the company.
That news prompted lawmakers across the country— including Florida Reps. Donna Shalala, Debbie Wasserman Schultz, and Debbie Mucarsel-Powell, along with Sen. Warren, the Massachusetts Democrat running for president, and U.S. Rep. Pramila Jayapal, a Democrat from Seattle — to demand an investigation of the deal.
“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 wrote. “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.”