Private prisons have been illegal in New York State since the passage of bills A 4484-B / S4118 in 2007. So Senator Brian Benjamin reasoned, like any illegal activity, why should it still be legal to finance them?

Senator Benjamin sponsored Bill 5433A in response, alongside co-sponsors Biaggi and Jackson, which “prohibits state chartered banking institutions from investing in and providing financing for private prisons.” This historic bill passed today in a Senate vote of 38 to 15 on highly partisan lines, with nine members not present. Given that, as Senator Benjamin’s office noted, they have not received any objections from any financial institutions to date, they view it likely that the bill will continue on its pathway and effectively become New York State law this year. That would make New York the first state in the country to fully ban private prison financing.

A prior version, Bill 5433, was approved in the Senate in June of 2019, but didn’t get taken to a vote by the Assembly by the end of the year to actually become law — which means, by New York State process, that it required a restart. Hence Senator Benjamin’s office reintroduced the bill, and expects the Assembly to vote on it as early as May. Then, the Governor would have until the end of the calendar year to sign it. 

This is just the next step of many that New York State has taken to show their distaste for private prisons and detention centers. The initial 2007 ban submitted by Assembly member Ortiz and State Senator Nozzolio, which only limits state, not federally run, facilities, explicitly referred to private prison companies as “hungry, bottom line adventurers (that) appear ready to take the public money.” 

Then, in June 2017, the New York City Pension Funds under Comptroller Scott Stringer divested from the private prison and detention industry, who made the following statement clarifying their reasons for taking such a move:

“With Donald Trump in the White House, we’re seeing more and more industries try to profit from backwards policies at the expense of immigrants and communities of color. But because of this major new step, we are demonstrating that we will not be complicit. We are standing up for what’s right. Our criminal justice system has failed a generation of Americans because, for decades, we built bigger prisons instead of greater schools, and we were ‘tough on crime’ instead of ‘smart on crime.’ Society used mass incarceration as an economic development strategy at the expense of communities of color.”

He added: “As President Trump ratchets up hateful rhetoric and steps up deportations, private prison companies are going to see enormous reputational harm — and that means they’ll become even riskier investments. Morally, the industry wants to turn back the clock on years of progress on criminal justice, and we can’t sit idly by and watch that happen. Divesting is simply the right thing to do — financially and morally.”

Next, in July 2018, the New York State Common Retirement Fund followed suit in committing to further divest from private prisons and detention centers. “For nearly two decades, the fund has recognized private prisons is a controversial industry and restricted investments,” noted DiNapoli spokeswoman Jennifer Freeman in the NY Daily News. “The current immigration situation is creating even more risks in their business model, which has consequences for their long term value.” The combination of these two divestments efforts led to over $50M being withdrawn from leading companies in the industry. 

This bill takes things one step further; not only prohibiting private prisons and detention centers from operating in the state, but from receiving financing from financial institutions chartered there — 205 at most recent public record. Given that major banks such as Wells Fargo, Bank of America, and JPMorgan Chase have recently committed to end their financing relationships with private prisons and detention centers, the passage of this bill introduces yet another challenge for private prison companies that have been seen now looking as far as Japan for financing as US-based institutions turn their backs on the industry. 

For now, there are currently two banks on the list of those chartered in the state of New York with publicly known relationships with private prison and detention centers—BNP Paribas and Barclays. Both recently committed to stop financing private prison companies when their current commitments expire, in the wake of widespread public protest.

This bill would reinforce these commitments, and prevent other NY chartered banks from being able to jump into the fray. It also explicitly prohibits not just credit and term loans, the primary targets of activist campaigns like those from the Families Belong Together Coalition, but also explicitly prohibits banks from owning their stocks as well. 

“With the overwhelming passage of my bill S5433A, the NY Senate has made a statement today loud and clear that we will not permit any financial institution to finance the private prison industry in NY or any other state,” said Senator Benjamin. “The private sector cannot be profiting off of mass incarceration and immigrant detention. That practice must end and this bill helps move us closer to that goal.”

Barclays declined to comment regarding this specific bill, and BNP Paribas did not respond to a request for comment. Thanks to Jasmine Rashid for her contributions to this piece. Full disclosures related to my work here. The author’s firm, Candide Group and their associated non-profit initiative, Real Money Moves, is a member of the #FamiliesBelongTogether coalition referenced in this piece. This post does not constitute investment, tax, or legal advice, and the author is not responsible for any actions taken based on the information provided herein.