Congress, Constitutional Law, Courts, Criminal law, Justice, Politics

Banks Have the Federal Prison System Handcuffed

department of treasury

Respectfully submitted by Lawrence E. Rafferty (rafflaw) Weekend Contributor

I have written in the past about our large financial institutions and their uncanny ability to break the law and escape any criminal penalties at the corporate or personal level.  If the Department of Justice had actually indicted a Bank of America official and procured a criminal conviction, that Bank of America official could have assisted the corporate office in their no-bid contract to handle all of the federal prison systems inmate financial services and email services.

“A few blocks north, however, at the New York Metropolitan Correctional Center, there exists a market that Bank of America has locked down, literally. For the 790 federal prisoners incarcerated at MCC, Bank of America controls the provision of money transfers, e-messaging and some telephone services.

The bank’s monopoly extends across the federal Bureau of Prisons system—121 institutions housing 214,365 inmates. Since 2000, Bank of America has collected at least $76.3 million for its work on the program.” Readersupportednews  That would be $76.3 Million dollars in the Bank of America coffers without any need or worry about having to compete for this latest sweetheart deal. 

Bank of America is not alone in taking advantage of federal prisoners financial services.  When a prisoner has paid his/her debt to society and leaves prison, the refund of the prisoner’s prison bank account is made via the use of high fee debit cards.

“When inmates are released, JPMorgan steps in, issuing high-fee payment cards to distribute money from their prison accounts, which include earnings from jobs and money their families send them.  The banks’ exclusive deals came not from the Bureau of Prisons, but from the U.S. Treasury.”  RSN  It would appear that these financial behemoths have “locked” up the prisoner financial service business and they never have to worry about having to deal with any competitors.

The Treasury department has seen to it that Bank of America and JP Morgan Chase will continue to make millions without any meaningful oversight or competition.  You may be wondering how the Treasury Department can issue these contracts without the normal bidding process.   The Treasury Department uses a law passed in 1863 to grant these so-called financial agency agreements without the inconvenience of having to actually bid out the agreement.

“Treasury’s power to award the deals, known as financial agency agreements, was created in 1863 to support the nation’s first national banking system, around the time the greenback was introduced. Since then, the department’s broad use of this power has drawn criticism from lawmakers, auditors with the Government Accountability Office, federal appeals court judges and the department’s own inspector general. Treasury has said the selection process is competitive enough and the contracts are handled responsibly.” RSN

It never ceases to amaze me that large and very profitable banks like Bank of America and JP Morgan Chase need sweetheart deals like these in order to “win” the business from the Department of Treasury.  Wouldn’t the interests of the American taxpayer be better served by requiring the normal bidding process for lucrative service contracts like these?  Should we actually allow the Treasury to utilize a power granted in 1863 due to the ongoing Civil War, which in effect drips of abuse and cronyism?

Would it surprise you to know that the “contract” allowing Bank of America to provide these financial services has been amended multiple times over the years in order to provide a bigger payout to Bank of America?

“The documents show how Treasury has expanded the scope of Bank of America’s contract—originally focused on managing accounts for inmates and tracking inventory at prison stores—to include an array of services for the nation’s largest prison system, from providing e-messaging to supplying the prison system with handheld scanners. The deal allows Bank of America to subcontract with other prison vendors, positioning it as a hub of prison services that are procured outside any government bidding process.

The contract has been amended 22 times in the past 14 years.”  RSN

This sweetheart contract is not only questionable, it provides Bank of America carte blanche power to control much of the prison services vendor business.  How can the Treasury claim that the process is “competitive enough”?  I think it is far past the time for the Justice Department to investigate these sweetheart deals.  Why would the Treasury Department utilize these non-bidding processes, at least in light of the appearance of impropriety?  Maybe it is time for an independent organization or prosecutor to “follow the money”. All the way to jail.

What do you think?

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50 thoughts on “Banks Have the Federal Prison System Handcuffed”

  1. Smh for sure, no one is stopping them. They own us and now can exert control over every facet of our lives and if you think that is hyperbole’ you should hear my story. I see it repeated all over america, it’s so easy to see the pattern. When code inspectors are forming national alliances and then trying to take on more law enforcement powers and then judges get involved and threaten people with jail over a pile of mulch, but really it’s just because they want homeowner to be terrorized and harassed from lucrative property….. bank of america financed or refinanced most of the homes around me. It was I researching why my neighborhood suddenly slid in to a dangerous place that I discovered this. Ironically they call it gentrification. In other words, they want a casino. In other cases they are trying to create a permanent lower class of renters only and discourage ownership.

    1. I smith – they are not supposed to do that. I harkens back to ‘redlining.’ However, a reading of Adam Smith may also tell you why your neighborhood is slipping into a lower class rental area.

  2. SMH, Absolutely! The duopoly control govt. and they protect themselves and their corporate cronies.

  4. yet again absolute proof that the corporation formerly known as a government no longer feels they have to hide their crimes. because they feel there is nothing the PEOPLE CAN DO TO STOP THEM…

  5. rafflaw – all government contracts seem to be tainted. You might want to look at the sweetheart contracts for the computer systems for Obamacare.

  6. This is exactly what happens when the government/public sector grows as a percent of the economy, people complain about how the government acts as an economic actor. The allocation of course becomes more political than economic. Color me surprised? No.

  8. Thanks, raff. Good Bear game. Oops, “Bad Jay” just appeared w/ 6 minutes to go and he throws a pick! The gift that just keeps on giving. He’s a loser. You will NEVER win w/ Cutler as QB.

  9. rafflaw,

    That should have read: Here’s a story you might find interesting…

  10. rafflaw,

    Interesting post! I hadn’t heard about this before.

    Here’s an interesting you might find interesting–if you haven’t already read it:

    Obama Administration To Reward Student Loan Company Accused Of Cheating Troops
    http://www.huffingtonpost.com/2014/08/29/obama-navient-student-loans_n_5736570.html

    Excerpt;
    The Obama administration plans to reward Navient Corp, the student loan specialist formerly owned by Sallie Mae, with new business some three months after federal prosecutors accused the company of intentionally cheating troops on their federal student loans, according to three sources familiar with the administration’s plans.

  11. It is an oft repeated observation that when someone goes to prison they learn not how to act lawfully in society but how to be a better crook. They couldn’t have better teachers than the banks. The education comes with a moral exposition as well. Do as I say, not as I do.

  13. Darren,
    You are right, but you may be too polite in merely labeling the banksters as predatory! 🙂

  14. Darren, I just had a comment eaten here. Your assistance is always much appreciated. Thanks.

  15. Good post, raff. There is an even unholier alliance. JP Morgan and EBT[food stamp cards]. JP Morgan was a big contributor to Obama, as are all Wall Street Banks, Well, under Obama, JP Morgan has made over $500 million from processing EBT cards in as sweetheart a deal as your will find. And, the Obama administration has been marketing EBT cards and upping the profits of JP Morgan by doing so. A record 45 million people have received EBT cards under this administration. They were caught marketing them to Hispanics doing Spanish radio ads. When exposed, the ads ceased.

    Corporate welfare, cronyism, is what angers libertarians like myself more than just about anything else. I did not know about this BOP sweetheart deal. So, thanks again. This is hopefully a travesty that both left and right can agree w/ us libertarians on.

  17. Oh, God! Yet another revelation that Obama’s terms are no different from Bush’s (illegal) ones in so many dismaying respects.

  19. Good story. I read about it this morning on a Naked Capitalism link to FDL. This is an interesting little factoid from the story:

    In order to process fund transfers from family members to inmates the banks often charge 35-45%.

    Squeeky Fromm
    Girl Reporter

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