Investing.com-- Shares of CoreCivic Inc and GEO Group- the two biggest private prison operators in the U.S., sank on Tuesday as President Donald Trump said he supported an offer from El Salvador to house U.S. criminals.
CoreCivic Inc (NYSE:CXW) slid 5.7% to $18.88, while Geo Group Inc (NYSE:GEO) fell 7.8% to $28.560. Both stocks steadied in aftermarket trade.
The White House is assessing whether it could take up an offer from El Salvador President Nayib Bukele to house U.S. inmates in the country’s CECOT mega prison, U.S. Secretary of State Marco Rubio said on Tuesday.
Trump said he would enact the move “in a heartbeat” if he had the legal backing to do so. Billionaire Elon Musk, who appears to be a major part of Trump’s administration, called the move a “great idea.”
A deal with El Salvador will essentially outsource a part of the U.S. prison system to the country.
“We are willing to take in only convicted criminals (including convicted U.S. citizens) into our mega-prison (CECOT) in exchange for a fee. The fee would be relatively low for the U.S. but significant for us,” Bukele had said in a social media post.
Still, the legality of such a deal was unclear, given that U.S. courts have protections for U.S. citizens that prevent them from being deported. Concerns over dangerous prison conditions in El Salvador, as noted by the U.S. State Department, could also block any move to deport U.S. citizens.
Any such deal with El Salvador will take business away from U.S. prison operators, which were initially expected to benefit from Trump’s crackdown on illegal immigration and border security. Trump signed several executive orders enacting such a crackdown in his first few days in office.
Core Civic and Geo shares had rallied sharply after Trump’s election victory in November on the prospect of increased government business. They had also surged after Trump’s 2016 election victory.