To house inmates serving federal sentences, it would stop contracting with private prisons, the U.S. Department of Justice issued a statement making the announcement in August. The stocks of Corrections Corporation of America, the world’s largest private prison company were sent plummeting after the news of the announcement. However, as soon as Donald Trump won the elections, the stocks jumped 40 percent. There was rise of 30 percent in the company’s main competitor, Boca Raton, Fla.-based GEO Group.
In October the name of the Nashville-based company was changed to CoreCivic. Detention centers used to house thousands of undocumented immigrants picked up by U.S. Immigration and Customs Enforcement are also overseen by the company along with its prison business.
“CoreCivic is well-positioned to provide innovative, dependable solutions,” says Jonathan Burns, CoreCivic’s director of public affairs.
For-profit prison companies “were likely to face negative headlines and persistent contract uncertainty under a Clinton White House,” Isaac Boltansky, senior vice president and policy analyst at Washington-based Compass Point Research & Trading, wrote after the election. “We expect a Trump administration to be more supportive given its focus on immigration and crime.”
He would carry ahead with his plans to deport or detain millions of undocumented immigrants after he takes office, Trump has said in a Nov. 13 interview with 60 Minutes.
“What we are going to do is get the people that are criminal and have criminal records, gang members, drug dealers, we have a lot of these people, probably 2 million, it could be even 3 million, we are getting them out of our country or we are going to incarcerate,” he said.
a total of $200,000 to groups working to elect Trump was contributed by the GEO Group in July and August. The day after the Justice Department announced it would phase out private prisons, Mother Jones reported its largest contribution came on Aug. 19.
“Our company’s political activities focus entirely on promoting the use of public-private partnerships, including in the delivery of offender rehabilitation programs, both in-custody and post-release. As a matter of long-standing policy, our company does not take a position on or advocate for or against any specific criminal justice, sentencing, or immigration policy,” says spokesman Pablo Paez.
Investors showing signs of caution while they see upside for prison companies. Valued at only a little more than half its 2016 peak is CoreCivic’s stock. GEO Group still shy of its top value, reached earlier this year even if it has had a stronger recovery.
Even if Trump’s deportation plans are enacted, whether the government would require a dramatic increase in detention center capacity is still not clear. Demand for facilities to hold people arrested as they come into the U.S. have been cut as border crossings have fallen. While removal proceedings move through immigration courts, undocumented immigrants not caught at the border are entitled to post bond. According to the Transactional Records Access Clearinghouse at Syracuse University, which tracks law enforcement statistics, say that those courts face a backlog of more than 520,000 cases.
(Adapted from Bloomberg)