Founded in 1852 and headquartered in San Francisco, Wells Fargo is one of the largest multinational banking and financial service corporations in the world. According to the 2016 third quarterly report released June 2016, Wells Fargo has more than 8,600 locations in 42 countries and approximately 269,000 full time employees. It is the twenty-seventh largest company in the United States, third in assets (at $1.9 trillion) and second in market value of common stock. In 2015, its revenues were $21.6 billion.
Wells Fargo is part of the syndicate of banks that have issued both CoreCivic, Inc. (formerly Corrections Corporation of America or CCA) and the GEO Group (GEO), the two largest private prison corporations in the United States, billions in revolving credit limits, loans, and bonds. By providing debt financing, Wells Fargo is enabling and profiting from, through interest and fees, mass incarceration.
In partnership with nine other banks, Wells Fargo has issued CoreCivic, Inc. a revolving credit limit of $900 million. Wells Fargo provides 14.7 percent of the credit limit or $132.5 million. The credit limit was increased from $450 million to $785 million in January 2012 to $900 million in March 2013. Wells Fargo acted as the issuing lender for CoreCivic, Inc.’s revolving credit limit. As an issuing lender, Wells Fargo allows CoreCivic, Inc. to conduct certain transactions without setting money aside, allowing CoreCivic, Inc. to invest money elsewhere. The issuing lender covers the costs if CoreCivic, Inc reneges.
GEO has been issued a revolving credit limit of $900 million from a syndicate of banks that includes Wells Fargo. The credit limit has increased to $900 million from $700 million in 2013.
Wells Fargo is a co-syndication agent for the credit limit, as well as a joint lead arranger and joint bookrunner.
CoreCivic, Inc and GEO have also relied on loans and bonds. In October 2015, CoreCivic, Inc was given a loan of $100 million, which Wells Fargo provided $14.3 million. In August 2014, Wells Fargo and other banks provided GEO with a loan of $296 million. Wells Fargo underwrote $42.5 million of notes for CoreCivic, Inc and $101.3 million of notes for GEO.
The debt financing from Wells Fargo and other banks allows the corporations to build new facilities and expanded their control of the criminal justice system through acquiring smaller companies in other sectors of the criminal justice system, including reentry facilities and electronic monitoring services. CoreCivic, Inc. has acquired two new companies and GEO has acquired eight new companies through debt financing. As more people argue against mass incarceration, CoreCivic, Inc. and GEO have diversified their businesses to alleviate any potential losses as prison populations decrease.
Wells Fargo also owns shares in CoreCivic, Inc and GEO. In 2016, Wells Fargo owned 779,902 shares in CCA and 438,648 shares, worth $40 million collectively.
Wells Fargo is one of 17 banks funding the Dakota Access Pipeline (DAPL). The proposed pipeline would stretch over 1,172 miles through North Dakota, South Dakota, Iowa, and Illinois, and cost $3.78 billion to build. The company building DAPL is Energy Transfer Partners, a Texas-based company. Although the project was approved in 2014, it has been facing protests for its potential environmental impact and the cultural significance of the region for the Standing Rox Sioux Tribe. The pipeline would run under Lake Oahe and protesters argue that the pipeline could put the tribe’s water supply at risk. The pipeline will also destroy the tribe’s sacred burial sites.
In 2016, Wells Fargo was fined $100 million by the Consumer Protection Bureau for creating over 2 million unauthorized checking and savings accounts and credit cards for its customers. The scandal was caused by an incentive-compensation program designed to increase sales, and led to the firing of 5,300 employees and $5 million in customer refunds.
In 2012, Wells Fargo entered a $175 million settlement agreement with the U.S. Department of Justice for allegedly discrimination against African-American and Latino borrowers from 2004 to 2009. Wells Fargo was also accused of steering African-American borrowers into higher-cost and higher-risk subprime loans, making foreclosure more likely. The Department of Housing and Urban Development (HUD) investigated Wells Fargo for racial discrimination and found evidence that Wells Fargo neglected homes within African-American and Latino neighborhoods compared to white neighborhoods. Wells Fargo entered a $42 million settlement agreement with the National Fair Housing Alliance for the neglect of foreclosed homes in minority communities.
Economic Activism Highlights
- February 22, 2017—Alameda City Council voted unanimously to refrain from investing in Wells Fargo for three years, which currently holds $36 million in general checking in the bank
- February 17, 2017—New York City Mayor Bill de Blasio sent Wells Fargo CEO a letter threatening to divest from the company if Wells Fargo continues to finance the Dakota Access Pipeline
- February 16, 2017—Santa Monica passed a motion to divest from Wells Fargo. The city currently has $1 billion in annual transactions and a portfolio that includes $4.6 million in Wells Fargo bonds
- February 15, 2017—East Orange City Council, in East Orange, New Jersey, passed a resolution to divest from Wells Fargo
- February 10, 2017—Davis City Council, in Davis, California, voted unanimously to divest from Wells Fargo, which currently provides the city $30 million in investments and $1 million cash balance
- February 7, 2017—Seattle’s City Council passed an ordinance that requires the City of Seattle to commit to fair business practices and to not renew nor make new investments with Wells Fargo for a period of three years
- January 29, 2017—University of California decided to terminate $150 million interest reset contract and $300 million line of credit with Wells Fargo, after previously terminating $25 million commercial paper contract in November 2016. The decision was the result of protests by the Afrikan Black Coalition and the Prison Divestment Campaign
- December 21, 2016—Portland’s City Council voted to temporarily halt investments in in all corporations, after groups lobbied for putting Wells Fargo and Caterpillar on the city’s No Buy List. Portland is expected to return to the issue in the first quarter of 2017
- October 18, 2016—Massachusetts suspended business with Wells Fargo for one year, removing the bank from a list of approved bond underwriters
- October 17, 2016—Ohio Governor John Kasich suspended Wells Fargo from doing business with state agencies for one year. Wells Fargo is excluded from issuing debt, bidding for financial services, or participating in state bond offerings
- October 3, 2016—State of Illinois suspended investments with Wells Fargo, following Chicago proposal to suspend business with Wells Fargo for two years
- July 19, 2016—City of Berkeley adopted resolution to divest from private prisons and sent a letter to Wells Fargo, and other companies on the “Millions Share List” to divest from private prisons
- February 22, 2016—Portland’s Social Responsible Investments Committee voted to recommend to the city to divest from Wells Fargo for its ties to private prison companies.