(Bloomberg) -- Bank of America Corp., the second-biggest U.S. bank, will stop lending to companies that run private prisons and detention centers.
“We have decided to exit the relationship'' with companies that provide prison and immigration-detention services, Vice Chairman Anne Finucane said Wednesday in an interview. “We've done our due diligence that we said we would do at the annual meeting, and this is the decision we've made.''
The move followed a review by the bank's environmental, social and governance, or ESG, committee, which included site visits and consultation with clients, civil rights leaders, criminal justice experts and academics. The Charlotte, North Carolina-based lender also met with its internal Hispanic and black leaders.
The company will stop its activities in the industry as soon as it can, while meeting contractual obligations, said Finucane, who leads Bank of America's ESG efforts.
Shares of two of the largest private-prison companies, GEO Group Inc. and CoreCivic Inc., fell as much as 4.3% and 4.4%, respectively, Wednesday. They both dropped at least 17% last year.
Steve Owen, a CoreCivic spokesman, said Bank of America misrepresented the company and based its decision on politics.
“We care deeply about doing business in an ethical, responsible way,” he said in an emailed statement. “This was clearly not a fair, transparent and genuine dialogue about corrections and detention.”
JPMorgan Chase & Co. took a similar step in March, breaking off its relationship with the industry after deciding it was too risky, and Wells Fargo & Co. is also halting loans to the industry. Protesters have been urging bank executives to back away from the business, and shares of several prison companies slumped last week after presidential candidate Elizabeth Warren tweeted about her plan to get rid of them.“The broader issues are the need for reforms in the criminal justice system and immigration,” Finucane said.
While the companies run centers on behalf of U.S. Immigration and Customs Enforcement, they've said they don't operate facilities that house unaccompanied minors. Detention centers have become a flash point in recent weeks amid reports of substandard conditions at facilities for migrant children. Warren also criticized Caliburn International Corp. for profiting off what she called the Trump administration's “inhumane” immigration policies.
“The GEO Group has never managed any facilities that house unaccompanied minors, nor have we ever managed border patrol holding facilities,” GEO Group Chief Executive Officer George C. Zoley said in a statement.
Representatives for Caliburn weren't immediately available to comment.
To contact the reporter on this story: Lananh Nguyen in New York at lnguyen35@bloomberg.net
To contact the editors responsible for this story: Michael J. Moore at mmoore55@bloomberg.net, Dan Reichl, David Scheer
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