Tuesday, September 23, 2008

Will Lehman Brothers' fall spell trouble for privately-owned prisons?

Posted By on Tue, Sep 23, 2008 at 10:28 AM

According to Grassroots Leadership, it could. Organizer Bob Libal writes in an e-mail that the investment banking firm has been "one of the largest, most consistent financial backers of the private prison industry."

Grassroots Leadership, the national Charlotte-based advocacy group, has a top priority of abolishing privately-owned prisons. Like other activists, it chiefly opposes the prisons because of their human rights record and for using their influence to promote expanded incarceration.

Libal writes:

Lehman Brothers became something of a fairy godmother to the private prison industry, bailing out struggling private prison corporations for much of the last decade. Lehman underwrote billions of dollars in bonds and credit for private prison corporations, financed the construction of dozens of private and public prisons, and provided a safety net when for-profit prison companies fell into financial instability.

Lehman Brothers has financed major deals for the three largest private prison firms, Corrections Corporation of America (CCA), the GEO Group (formerly Wackenhut Corrections) and Cornell Corrections.

He adds, "One thing is for sure: if another company picks up Lehman's role as lead private prison financier and cheerleader, they should be prepared for a divestment campaign."

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