One of the biggest supporters of prison privatization is Wells Fargo, a major beneficiary of the TARP bailout in 2008. The bank owns 4 million shares in the Geo Group, the second largest private prison corporation in America, and 50,000 shares in the Corrections Corporation of America (CCA), the largest private prison corporation in the country. These shares combined are valued at more than $120 million .
Other major investors in one or both of these companies include Vanguard, Lazard, Scopia, Wellington Management, FMR (Fidelity), BlackRock and Bank of America.
Companies such as CCA and the Geo Group do not earn their money by providing goods or services to customers. Rather, they make their money solely from the government fun running immigrant detention centers, and federal and state penitentiaries. Detentions of immigrants alone is costing taxpayers billions of dollars a year, much of which goes directly into the coffers of privatization firms.
As hedge fund managers and finance industry leaders like Wells Fargo increase their investment in the prison privatization complex, there is increased pressure on companies serving this sector to grow. To help secure profits CCA, the GEO Group and other firms have turned to lobbying congress for harsher punishments and longer sentencing guidelines, largely through the American Legislative Exchange Council (ALEC), a corporatist conservative political group. According to the Nation:
ALEC helped pioneer some of the toughest sentencing laws on the books today, like mandatory minimums for non-violent drug offenders, “three strikes” laws, and “truth in sentencing” laws. In 1995 alone, ALEC’s Truth in Sentencing Act was signed into law in twenty-five states. (Then State Rep. Scott Walker was an ALEC member when he sponsored Wisconsin’s truth-in-sentencing laws and, according to PR Watch, used its statistics to make the case for the law.)
ALEC arranged secret meetings between Arizona’s state legislators and CCA to draft what became SB 1070, Arizona’s notorious immigration law, to keep CCA prisons flush with immigrant detainees.
ALEC helped amend the Prison Industries Act in 2004 to allow correctional institutions to withhold inmate wages in order to offset the cost of incarceration and pay for the construction new prison facilities. Because of these changes to the Act, prisoners are become a growing cheap labor force that is starting to undercut the business of corporations that don’t use it. In fact it has become so cheap that several states are now looking to replace public sector workers with prison labor.
These are just a few examples of how privatization companies and Wall Street are shaping our criminal justice system and spurring on the continued mass incarceration of U.S. citizens (especially minorities and the working poor).
Meanwhile the growth of the industry has been very profitable for investors. A recent report by the Justice Policy Institute, called ‘Gaming the System’, found that since 2000, the number of prisoners held in private federal prisons increased by 120 percent, while those detained in private state prisons shot up by 33 percent. Perhaps more important to shareholders, however, is the fact that revenues have increased by over 160% during the same period. This has occurred at the same time that crime rates throughout the country have been in decline.
To help fight the ongoing privatization of prisons, community groups and unions across the US, are calling on all public and private institutions to divest their holdings in CCA, the GEO Group and other American private prison corporations.
They are also asking Wells Fargo customers to ask their bank to divest. If that doesn’t work, then perhaps its time to move your money to a Community Bank of Credit Union. Why not put your savings to work building neighborhoods instead of destroying lives.
The following video was produce by Immigrants For Sale to illustrate how private prisons companies are profiting from the detention of undocumented (and documented) immigrants.