Wells Fargo is one of the largest banking and financial services company in the world. It finances and invests in private prison companies like CoreCivic and GEO Group, although it plans to divest from them.
Founded in 1852 and headquartered in San Francisco, Wells Fargo is one of the largest multinational banking and financial service corporations in the world. As of 2017, Wells Fargo has more than 8,300 locations in 42 countries and approximately 263,000 full-time employees. It is the twenty-seventh largest company in the United States, third in assets at two trillion dollars and second in market value of common stock. In 2017, its revenues were $88.4 billion.
Financing Private Prisons
Wells Fargo is part of the syndicate of banks that have issued both CoreCivic, Inc. and The GEO Group, the two largest private prison and immigrant detention companies in the United States, billions in revolving credit limits, loans, and bonds. By providing debt financing, Wells Fargo has enabled and profited from mass incarceration and immigrant detention. In 2018, Wells Fargo held ten percent of the total debts of both CoreCivic and GEO held by Wells Fargo, JPMorgan Chase, and Blackrock. In its 2018 Business Standards Report, Wells Fargo reported that as part of its environmental and social due dilligence, its "credit exposure to private prison companies has significantly decreased and is expected to continue to decline." In March 2019, Wells Fargo CEO Timothy Sloan declared that the bank has decided two years ago to end its business relationships with both CoreCivic and Geo Group. A bank's spokesperson later confirmed that Wells Fargo had "cut ties" with CoreCivic and will do the same with regard to Geo Group when its current obligations expire.
In 2016, Wells Fargo was part of a syndicate of banks with SunTrust, Bank of America, JPMorgan Chase, BNP Paribas, and Barclays that issued each CoreCivic and GEO revolving credit limits of $900 million. CoreCivic’s credit limit was increased from $450 million to $785 million in January 2012 to $900 million in March 2013. GEO’s credit limit was increased to $900 million from $700 million in 2013.
Wells Fargo provided 14.7 percent of the credit limit, or $132.5 million and acted as the issuing lender for CoreCivic’s revolving credit limit. As an issuing lender, Wells Fargo allows CoreCivic to conduct certain transactions without setting money aside, allowing the private prison company to invest money elsewhere. The issuing lender covers the costs if CoreCivic reneges. Wells Fargo is a co-syndication agent for GEO’s credit limit, as well as a joint lead arranger and joint bookrunner.
CoreCivic and GEO have also relied on loans and bonds. In October 2015, CoreCivic 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 and $101.3 million of notes for GEO.
Investing in Private Prisons
Enlace International, a social and economic justice organization, identifies Wells Fargo as one of six major lenders for CoreCivic and GEO, along with Bank of America, JPMorgan Chase, BNP Paribas, SunTrust, and U.S. Bancorp. Wells Fargo is also one of 42 major investors that own over one million shares in CoreCivic and GEO, dubbed as “The Million Shares Club” and targeted by groups like Enlace. As of its 2018 filings with the Securities and Exchange Commission, Wells Fargo owns 790,809 shares in CoreCivic and 646,930 shares in GEO.
Wells Fargo has been facing public pressure and protest from immigrant rights activists for its role in financing GEO Group and CoreCivic, the two largest private prison and immigrant detention companies. In 2017, Make the Road New York and the Center for Popular Democracy launched the “Backers of Hate” campaign to bring attention to how these corporations directly profit from the increasing rates of immigrant detention and demands for facilities.
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.
- On April 19, 2018, American Federation of Teachers President announced that the union would "cut ties" with Wells Fargo over the company's ties to the National Rifle Association (NRA). Wells Fargo manages approximately 20,000 AFT's members’ mortgages, but AFT will remove the bank from its list of approved lenders.
- On December 13, 2017, Los Angeles City Council unanimously voted to approve the Request for Proposal for banking services contracts, which would disqualify the city from doing business with Wells Fargo because of its downgraded Federal Community Reinvestment Act Rating. Wells Fargo holds approximately $75 to $100 million of the City's operating funds.
- On September 11, 2017, St. Peter's City Council voted to divest over $700,000 from Wells Fargo, due to the company's involvement in the Dakota Access Pipeline and fraudulent business practices.
- On May 30, 2017, Berkeley City Council unanimously passed a plan to divest from Wells Fargo, citing the banks poor business practices, such as creating 2.5 million fraudulent accounts and financing the Dakota Access Pipeline. The contract is expected to end in May 2018.
- On April 26, 2017, University of Wisconsin-Madison students passed a resolution to call for the university's divestment from private prisons and corporations that build border walls, naming Lockheed Martin, Raytheon, General Dynamics, Northrop Grumman, Honeywell, L-3 Communications, Boeing, Bank of America, JP Morgan Chase, BNP Paribas, Suntrust, US Bank Corp., and Wells Fargo.
- On April 6, 2017, Philadelphia mayor submitted legislation to the city council to divest $2 billion in employee payroll from Wells Fargo. The mayor made the decision after Wells Fargo's recent bank practices that call into question the bank's financial ethics.
- On April 5, 2017, the City Council of Portland, OR, voted to stop all new investment of city cash in corporate debt. "The vote followed hours of testimony from members of the public who said they did not want their tax dollars supporting corporations." While the decision impacts all corporate securities, companies that were specifically named during public testimony included Nestle, Wells Fargo, and Caterpillar.On April 3, 2017, Missoula City Council voted unanimously to divest from Wells Fargo, citing "shady business practices" and involvement in the Dakota Access Pipeline. The bank currently manages $3 million in city funds.
- On April 4, 2017, Missoula City Council voted unanimously to divest from Wells Fargo, citing the banks "shady business practices" such as the fake account scandal and involvement in the Dakota Access Pipeline. The city currently has $3 million in city funds in Wells Fargo.
- On March 20, 2017, D.C. Finance and Revenue Committee is considering a resolution to divest from Wells Fargo because of its involvement with the Dakota Access Pipeline and poor business practices, such as creating 2.5 million fraudulent accounts. Wells Fargo is D.C.'s "bank of record" and the city just renewed a $12 million, five-year contract with the bank.
- On March 14, 2017, San Francisco’s Board of Supervisors voted unanimously to divest from banks financing the Dakota Access Pipeline, including Wells Fargo. About $1.2 billion of the city’s portfolio, nearly 14 percent, is invested with these 17 banks.
- On February 22, 2017, Alameda City Council voted unanimously to refrain from investing in Wells Fargo for three years because of the city's involvement in the Dakota Access Pipeline and its "history of controversial practices" such as the bank's creation of 2.5 million fraudulent accounts. The city currently holds $36 million in general checking in the bank.
- On 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.
- On 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
- On February 15, 2017, East Orange City Council, in East Orange, New Jersey, passed a resolution to divest from Wells Fargo for its discriminatory lending practices, fraudulent accounts scandal, involvement in the Dakota Access Pipeline, and support of the Trump Administration.
- On February 10, 2017, Davis City Council, in Davis, California, voted unanimously to divest from Wells Fargo, citing the bank’s involvement with the Dakota Access Pipeline and the creation of over 2 million fraudulent accounts. Wells Fargo currently provides the city $30 million in investments and $1 million cash balance.
- On 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
- On 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
- On October 18, 2016, Massachusetts suspended business with Wells Fargo for one year, removing the bank from a list of approved bond underwriters
- On 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
- On October 3, 2016, State of Illinois and Chicago suspended investments with Wells Fargo for two years, citing the company’s creation of 2 million unauthorized accounts. Chicago is divesting $25 million from the bank, and Illinois is divesting $30 billion.
- On July 19, 2016, City of Berkeley adopted a 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.
- On 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.