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Private-prison stocks plunge after DOJ memo

The Justice Department began contracting out to private prisons about a decade ago, according to the memo, and now work with 13 prisons. This was in direct conflict with the claims by private prisons that they would be saving the government money.

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“Private prisons served an important role during a hard period, but time has shown that they compare poorly to our own Bureau facilities”, Yates wrote in the memo. Neither GEO Group nor Corrections Corp could be reached immediately for comment.

The private prisons now hold about 22,000 federal prisoners, around 12 percent of the total federal inmate population.

Citing unsafe, ineffective correctional services, the Justice Department plans to stop using private prisons.

Privately run immigration detention facilities include two family detention centers in Texas, holding up to 2,500 mothers and children.

The government chose to use private prisons to house inmates about a decade ago, Yates said.

Before Thursday, the Bureau of Prisons had been working toward the goal of phasing out private prison contracts when, three weeks ago, it did not renew a contract for 1,200 beds, Yates said.

In 2015, the United States held 25 percent of the world’s prisoners even though it only accounts for 5 percent of the world’s population, according to the White House. Today, there are about 195,000 inmates in both government-run and private federal prisons, down from a peak of 220,000.

Stocks for private prisons like CCA and the GEO Group and tumbled followed the announcement, at one point in the day losing more than half their value. She acknowledged that the facilities would not close overnight; nor would the DOJ terminate existing contracts.

“Any casual reader would come to the conclusion that contract prisons are not as safe as BOP prisons”, Marquardt said. While the state of Florida has seven private prison facilities, those are all contracted by the state.

When most people think of the Justice Department, they are likely to imagine the most visible parts of our job – the law enforcement agents who investigate crimes or the lawyers who prosecute them.

In her memo, Yates said that private prisons “served an important role during a difficult time period”, but it was “really hard to determine whether private prisons are less expensive”. In an opinion piece in Digital Journal past year, the writer condemned the private corrections facilities for distorting the justice system in this country, making huge profits, and debasing our justice system.

Mr Hanson said both companies would need to update their financial outlooks after the Justice Department news.

“This is the first step in the process of reducing-and ultimately ending-our use of privately operated prisons”.

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Advocates for prison reform celebrated the announcement.

Loretta Lynch