NASHVILLE, Tenn. (WMOT) -- Nashville based Corrections Corporation of America lost more than a third of its stock value Thursday following an announcement by the Department of Justice that it will begin phasing out the use of privately held companies to house federal inmates.
Deputy Attorney General Sally Q. Yates issued a memorandum Thursday outlining DOJ plans to terminate or scale back contracts with for-profit companies now operating 13 federal prisons. CCA currently operates four of those facilities.
Yates notes that the federal government began using private prison contractors in the 1980s as the number of Americans incarcerated skyrocketed. She says the number of federal inmates rose by 800 percent between 1980 and 2013.
When the number of convicts serving time in federal facilities peaked in 2013, private prisons were housing 30,000 of the 220,000 federal inmates. Yates says changes in federal sentencing guidelines should reduce prison populations still further in the coming years, reducing the need for contract prisons.
Yates also cites a DOJ Inspector General’s report to assert that for-profit prisons “compare poorly to our own Bureau facilities.” She says privately operated prisons are less safe and secure, provide fewer resources for inmates, and “do not save substantially on costs.”
Corrections Corporation stock dropped sharply following the announcement, ending down more than 35 percent Thursday afternoon at the close of the New York Stock Exchange.