CRYSTAL BALL

Private prison companies in the US lost more than $2 billion in value—and counting

Earlier this month, the US Department of Justice announced it would move away from using private prison companies for federal inmates, citing inefficiency and problems with safety and security. On Aug. 29, Jeh Johnson, the head of the Department of Homeland Security (DHS), announced that the agency would also re-evaluate its cooperation with those companies, which run immigration detention facilities, too.

The first announcement sent tumbling the stocks of the largest private prison companies, Corrections Corporation of America (CCA) and GEO Group. The latest news deepened their losses. Together, the two companies have now lost more than $2.2 billion in value—CCA $1.2 billion in market capitalization and the GEO Group $917 million.

Since the DHS just started its evaluation process, more bad news for the private prison companies is likely. Privately-run immigration detention facilities are as notorious for their conditions as for-profit prisons. Advocates have been exposing problems plaguing the facilities for years.

CCA and the GEO Group also operate many state prisons, which keep tens of thousands of inmates. Part of their fate will depend on the willingness of state authorities to follow in the steps of the federal system. David Fathi, director of the National Prison Project at the American Civil Liberties Union told the Washington Post that since the federal system is seen by prison state system as the “gold standard” of best practices, states are likely to act in the same vein. “The fact that the federal prison system is ending its use of private prisons could encourage some other states to follow suit,” he said.

But this still does not mean the end of the private prison industry. Foreseeing changes in policy from authorities as the US tries to wrestle with its mass incarceration boom, the companies have in recent years turned to diversifying their services. They have been investing in alternatives to incarceration: rehabilitation, monitoring, re-entry and mental health. But problems persist, The Nation reported. The companies have to turn a profit, and end up cutting funds for staff, training, programs, even food.

Jason Karaian contributed reporting to this article.

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