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The Trump administration rescinded an Obama-era directive that phased out private prisons

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Less than 24 hours after the Trump administration withdrew guidelines allowing transgender students to use the bathroom of their choice at public schools, it rescinded another Obama-era directive that called for the phasing out of private prisons, according to the Associated Press.

The announcement came in a memo from Attorney General Jeff Sessions replacing one put forth in August by then-Deputy Attorney General Sally Yates, who said that "they compare poorly to our own Bureau facilities."


"The [previous] memorandum changed long-standing policy and practice, and impaired the Bureau's ability to meet the future needs of the federal correctional system," the memo issued by Sessions read. "Therefore, I direct the Bureau to return to its previous approach."

The Justice Department began contracting with private companies to alleviate the booming federal prison population, which increased by about 800 percent between 1980 and 2013. In December 2015, private prisons accounted for about 12 percent of the total federal prison population, according to an inspector general report. The report also concluded that contract prisons "incurred more safety and security incidents per capital than comparable [Federal Bureau of Prisons] institutions."


"Incidents" mentioned in the report included contraband finds, assaults, uses of force, lockdowns and other selected categories of grievances.

Leading up to the 2016 election, private prison groups -- including the Corrections Corporations of America, which renamed itself as CoreCivic, and GEO Group -- experienced some of their biggest stock declines. After President Trump's victory, CoreCivic's stocks gained 43 percent, while GEO's increased 21 percent.

"Private prisons would likely be a clear winner under Trump, as his administration will likely rescind the DOJ's contract phase-out and ICE capacity to house detainees will come under further stress," analysts at Height Securities LLC wrote.

After Sessions' announcement, prison stocks experienced a similar surge.

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