>> Private prison shares collapsing Thursday, in US markets, after the justice department abruptly said it would phase out the use of commercial operators to house federal inmates. Corrections Corporation of America plummeting nearly 50% at 1 point, with the Geo Group off by a similar amount on the news.
Justice reporter, Julia Edwards.>> This came out of nowhere. Shareholders and investors had priced in the fact that the United States has the largest incarceration rate and that many of those prisoners in the federal system, about 16%, are housed in facilities run by private prison groups. The Justice Department said that it would begin to let these contracts expire.
If States decide to follow suit and end their contracts, it might be very difficult for these companies to keep afloat.>> The Justice Department calling the facilities less safe and less effective than government run prisons. In a memo Thursday, Deputy Attorney General Sally Yates, citing an internal probe that private prisons, quote, simply do not provide the same level of correctional services, programs and resources.
And they do not maintain the same level of safety and security.>> Pressure against private prison companies has been mounting for years. It culminated just a few weeks ago with a report from the Justice Department Inspector General. They picked apart a May, 2012 incident in a Mississippi facility run by a private company, in which 250 inmates started a brawl because of their low quality medical care and food.
In fact, in that brawl, one corrections officer was killed, the Justice Department expects to start seeing a decrease at least by May 1st of 2017. At that point, there should be 50% fewer inmates in private facilities compared to 2013 when the number peaked.