Bank of America, one of the last big Wall Street banks to fund the private prison industry, announced Wednesday that it would be exiting the detention industry.
The move comes one day after bank officials toured the Homestead center — a private shelter near Miami that has been under attack for detaining migrant children for long periods in poor conditions. It’s run by Caliburn, a detention company partly financed by Bank of America. A report from the Miami Herald in May revealed the bank provided the shelter a loan of $380 million and a $75 million revolving credit line.
“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,” the bank’s spokesperson told CNN.
Caliburn said it would not be affected by Bank of America’s decision to withhold credit because it is technically a temporary “influx” shelter, not a detention center. The company has also been adamant that it is not in the private prison business. Activists, however, argue that the conditions of the facility are on par to that of a prison, because children are unable to leave the perimeters.
It is unclear how Bank of America views Homestead: Despite the operator’s denial, sources from Bank of America told the Miami Herald that the bank considered Homestead a private detention facility, and it has not yet responded to Caliburn’s comments.
Even if the bank’s decision applies in this case, it won’t change the quality of life for children detained at facilities operated by Homeland Security, like the one in Clint, Texas. But the company’s move is part of a growing trend of businesses turning their back on detention facilities, especially as the conditions for detained migrants grow more controversial by the day.
CoreCivic and Geo Group, the two largest private prison operators in the US, have already felt the effects of a growing distrust against their industry. JPMorgan Chase announced it would no longer finance private prisons and detention centers in March — a major blow for the two companies that have received at least $254 million in debt from the bank.
The two private prison operators have also lost funding from Wells Fargo, thanks in part to pressure from activists and lawmakers. When Wells Fargo CEO Timothy Sloan was questioned by the House Financial Services Committee for their business practices March 13, Rep. Alexandria Ocasio-Cortez (D-NY) criticized the bank for “financing the caging of children” — a claim that Sloan denied. Soon after, a statement from Wells Fargo reiterated that the bank had already cut ties with CoreCivic and was on track to withdraw from financing Geo Group as soon as possible.
Banks cutting ties with the private prison industry is bad news for the detention center operators. Most of these facilities rely on debt financing from these banks to pay for their day-to-day operational fees. The operators pay off the banks when they secure government contracts, which then gives them the ability to continue taking out loans. Other sources of financing exist, but without a steady stream of loans to keep the cycle going, private prison operators wouldn’t be able to keep their facilities open.
Until now banks have profited from this arrangement, collecting millions of dollars in interest. They’re now realizing, however, that the risk of doing business with this industry now outweighs the financial benefits.
The longest a child has been in the Homestead center: more than 120 days
Financing Homestead isn’t a good look for Bank of America, which is exactly why it pledged to pull out of the private prison industry, even if it may not directly affect the facility’s operator.
While Caliburn insists that it only runs “temporary emergency shelters,” critics are questioning how “temporary” applies when children are being held for weeks. According to a report from the New York Times, 1,162 out of about 2,300 children had been held at the center for at least 20 days. The longest held child was a Guatemalan boy, who had been held there for more than 122 days, or four months.
The report is even bleaker when it comes to facility conditions: Children at the shelter complain about loud noises and a lack of privacy, and although most shelters often take the children for trips outside the perimeters for a change of scenery, most children at Homestead do not get to leave the facility unless they are heading to a medical appointment. While government-run shelter must follow strict standards — such as releasing a child after 20 days or having a strict vetting process for staff — Homestead does not have to abide by such rules because it is privately owned.
Presidential candidates, who are already in Miami for the first round of primary debates this week, have been flocking to the detention center.
But even federally operated facilities, in some cases, aren’t much better. The US government is struggling to keep up with the growing number of children separated from their parents at the border, which has led to poorly managed shelter conditions. Homestead had to double its capacity after a tent camp for migrant children in Tornillo, Texas, closed. Most recently, the Trump administration was under attack for denying basic hygiene to migrant children at a shelter in Clint, Texas.
As Vox’s Dara Lind explained, the “problem isn’t the Clint facility,” or Homestead.
The problem is the hastily-cobbled-together system of facilities Customs and Border Protection (the agency which runs Border Patrol) has thrown together in the last several months, as the unprecedented number of families and children coming into the US without papers has overwhelmed a system designed to swiftly deport single adults.
Rather than risking a hit to its public reputation by being involved in the border crisis, Bank of America is steering clear from the controversy.