Bank of America – Regions Bank won’t finance private prison company CoreCivic

Birmingham based Regions Bank will not continue a line of credit with the private prison company CoreCivic, beyond the company’s contractual obligation, with runs through 2023, a company spokesman confirmed to APR on Saturday. 

Regions spokesman Jeremy King told APR by phone Saturday that the decision came after company executive met Tuesday with representatives from Black Lives Matter Birmingham, Faith in Works and Alabama Students Against Prisons.

Those groups had asked the bank to stop doing business with CoreCivic, which is set to build two of Alabama’s three new planned prisons, in Escambia and Elmore counties. 

“We listened to feedback and comments from Black Lives Matter of Birmingham, along with other organizations, and then continued this conversation internally, as well as with additional outreach to Cara McClure from Black Lives Matter of Birmingham,” King said. 

King said the decision was made not to extend additional credit services to CoreCivic beyond the current contract. 

“We’re also specifically not providing CoreCivic with financing for the prisons that CoreCivic is going to build in the state,” King said. 

“To be clear, Regions Bank is 100% committed to creating more inclusive prosperity and advancing racial equity,” Regions said in a statement on Saturday. “This past Tuesday, Jan. 26, we met with the Black Lives Matter Birmingham Chapter and other organizations to receive feedback on the issue of private prisons. We listened closely to concerns that were shared, and we appreciate the candid feedback we received.” 

Carla Crowder, executive director of Alabama Appleseed Center for Law and Justice, in a message to APR on Saturday said that Regions has reached the same conclusion as so many other large banks across the country.

“That financing for-profit incarceration is no longer right for them. We are incredibly pleased to hear that the largest financial institution headquartered in Alabama is saying no to CoreCivic,” Crowder said. “However this raises even more questions about Gov. Ivey’s secret prison plan, specifically around CoreCivic’s source of financing. Shouldn’t Alabama lawmakers and taxpayers know where the money is coming from before these billion dollar contracts are signed?”

Isabel Coleman, a Birmingham native studying at Yale University and a board member with Alabama Students Against Prisons, a coalition of students from colleges and universities across the country, whose members either go to school in, or have ties to Alabama, said on Saturday that the group was surprised to learn in an email Friday that Regions had made the decision.

Coleman said the group is appreciative of Regions for taking this step, but that they’d like more assurances that Regions won’t be providing funding to any other private prison companies. 

“And we’d like to get a bigger public statement from them, in writing as well, on their commitment,” Coleman said. 

Josh Thompson, a University of Alabama in Huntsville student and Alabama Students Against Prisons member  who attended Tuesday meeting told APR on Sunday that during Tuesday’s meeting, a Regions executive said the line of credit with CoreCivic was established to be used for operational expenses, but that the bank couldn’t guarantee that the money wasn’t going towards building the prison.

“He said they could easily probably write a check, transfer the money over somehow, and they can’t track what they’re doing with the money after it’s been spent from their credit line,” Thompson said. “If they wanted to somehow move a few funds from everyday operations into the construction of a prison, they could and Regions wouldn’t know.” 

Thompson said bank executives told them during the meeting that Regions was asked by CoreCivic to provide financing for the prison construction but that the bank declined. 

Asked about the statement regarding the bank’s inability to track how the money is spent by CoreCivic, King explained in a message to APR on Sunday that the credit line to CoreCivic “is not for the Alabama prison plan” and “was designed for operational needs.” King also noted that the credit line with CoreCivic predated the Alabama prison plan. 

CoreCivic has faced increased public pushback for providing housing for immigrants for the U.S. Immigration and Customs Enforcement, some of which held children in cages along the U.S. border, which spurred condemnation and lawsuits alleging mistreatment and abuse of those detained. 

CoreCivic in 2019 scrapped a deal with Bank of America in which the company sought the bank’s help raising $250 million from investors to pay back revolver debt, according to Fintech Zoom. 

Wells Fargo, SunTrust, Bank of America, BNP Paribas, Barclays and Fifth Third Bankcorp have all said the banks would stop financing private prison and immigration detention companies.

Without access to those banks, CoreCivic and Geo Group stand to lose 72 percent, or $1.9 billion, of the companys’ current available financing, according to a joint report in 2019 by In the Public Interest and several other groups.  Financing for several private prison company’s in recent years has been uncertain, and those companies have been changing strategies to weather public pushback and dwindling access to capital. 

CoreCivic in August 2020 was downgraded by Standard & Poor’s Global Ratings from the S & P MidCap 400 index to the S & P SmallCap 600, according to Fintech Zoom, which reported that the downgrade means the market value had fallen enough to put CoreCivic into a new group of peers. 

The U.S. Department of Justice in December filed a federal lawsuit against the state of Alabama and the Alabama Department of Corrections alleging violations of inmates’ constitutional rights to protection from prisoner-on-prisoner violence, sexual abuse and excessive force by prison guards. 

In previously released reports the Justice Department detailed systemic problems of abuse from guards, corruption, rampant drug use, violence, overcrowding and understaffing n Alabama’s prisons.  The DOJ in those reports states that while new prison facilities might help in some areas, new buildings won’t fully address the state’s widespread, deadly problems in its prisons.

ADOC officials have also said the new prisons alone won’t solve the overcrowding issues in state prisons. Suggested prison reform legislation that might have helped addressed overcrowded stalled last year, when the COVID-19 pandemic ended the state’s legislative session early. 

While the news from Regions was welcomed by the groups pushing for it, Coleman said “this doesn’t really change anything” related to the construction of the new prisons. 

Gov. Kay Ivey is expected to sign the contract with CoreCivic to build those two new prisons soon, according to The Montgomery Advertiser. Another entity, Alabama Prison Transformation Partners, is expected to build the state’s third new prison in Bibb County.

The prison construction plan is expected to cost at least $2 billion, and the state won’t ultimately own the prisons, which are instead be leased to the state, which will operate them. Previous attempts by the state legislature to pass legislation that would have allowed the state to borrow money to build its own prisons failed.

Ivey’s decision to move forward with a build-lease plan circumvents the need for the state Legislature to approve the deal. Ivey and ADOC commissioner Jeff Dunn have declined to release the financial details of the prison construction plan. It’s also not expected that those details will be publicly released before Ivey signs the contract with CoreCivic some time soon, which has prompted concern from some lawmakers worried over the lack of transparency, and what the deal might ultimately cost taxpayers. 

“This is the next step in the process,” Gina Maiola, a spokeswoman for Ivey, wrote in an email Friday to The Montgomery Advertiser. “It is our expectation the governor, on Monday, will sign lease agreements to lease two new men’s correctional facilities to be constructed by CoreCivic’s developer team.”