Exactly 17 months ago, in August of 2016 -- back when most election polls had Hillary Clinton clinching the 2016 presidential election -- the Obama administration announced that it would end the Justice Department's (DOJ) reliance on private prisons. The announcement came seven days after the DOJ's inspector general (IG) called on the federal Bureau of Prisons (BOP) to more rigorously oversee its contracts with private prison companies. The IG's report found that private prisons at the federal level consistently fail to measure up to federal standards in preventing dangerous conditions, intercepting contraband, and ensuring internal accountability for staff misconduct.
Shares of the private prison titans tanked.
CoreCivic and GEO Group's stocks both ended the day down more than 35 percent and 39 percent, respectively -- an indication that the nation's largest for-profit prison corporations' profitability might be on the wane. The day after the announcement, GEO Group CEO George Zoley stated in a conference call, “There's been an overreaction to the news about the contracts. We think, in time, this will correct itself.” Even George Zoley couldn't have predicted today's turnaround.
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