Now, analysts have begun to worry about a future financing crunch for the two companies that together account for 80 percent of the private prison industry. The Massachusetts lawmaker described private detention facilities as rife with corruption, mistreatment of inmates and support from lobbying efforts in Washington. “We don’t really know the landscape or horizon of what is going to happen. The state of California, for instance, recently canceled a contract to house low level state offenders in three private prisons run by The GEO Group, according to a report by Businessweek. GEO Group’s top ten institutional holders, including mutual funds, owned around 37.4 million shares, or close to 50% of the company’s total issued stock. GEO Group’s profit increased 14 percent, to $83 million, during the first half of the year, and the company anticipates bringing in $2.47 billion in revenue this year. Investors were thrilled, sending Geo and CoreCivic stocks even higher Friday. A condemned inmate is led out of hiscell on death row at San Quentin State Prison in San Quentin, California, on Aug. 16, 2016. The Nashville-based REIT has close to …
The companies continue to be buoyed by government contracts, which began to grow amid the Central American refugee crisis in President Barack Obama’s second term.
For his part, president-elect Donald J. Trump has called for increased deportation of undocumented immigrants. JPMorgan Chase, the nation’s largest bank, announced that it would stop financing the industry profiting from immigrant detention in March, following similar moves by Wells Fargo and U.S. Bank. “It’s unfortunate that misleading political activism has been allowed to impact decade-long banking relationships,” GEO Group spokesman Pablo Paez said in a statement. The outlook changed dramatically after Trump's historic win. The U.S. prison population has been declining in recent years, but analysts note that over 200,000 U.S. prison beds are in facilities that are more than 75 years old. “All this stuff is very much associated with Trump in the public imagination, but the trends were set during the Obama administration,” said Alan Zibel, a research director at Public Citizen who wrote a recent report on the federal contracts. Later in 2016, when President Trump was elected, the stock prices of private prison companies CoreCivic and GEO soared. All content of the Dow Jones branded indices © S&P Dow Jones Indices LLC 2019 and/or its affiliates. During an August conference call with analysts, Damon Hininger, CoreCivic’s chief executive, called the banks’ decision to cease financing the industry “a result of politically motivated threats.” The banks had “clearly bowed down to a small group of activists,” he said. A spokesperson for the Geo Group told the outlet its facilities are "highly rated by independent accreditation entities.". All rights reserved. [See: PLN, June 2015, p.56]. Standard & Poor's and S&P are registered trademarks of Standard & Poor's Financial Services LLC and Dow Jones is a registered trademark of Dow Jones Trademark Holdings LLC.
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