Criminal Justice Changes are Squeezing the Bail-Bond Industry

Aladdin Bail-Bonds, one of the country's largest bail-bond providers.

The bail-bond industry in San Francisco, California is one of the largest markets out of all the U.S states, it accounts for one-quarter of the bail-bond industry's revenue. Aladdin Bail-Bonds, which is located in San Francisco, is actually one of the country's largest bail-bond providers. Recently, a private equity firm called Endeavor Capital, has sold its stake in Aladdin Bail-Bonds because of pressure from the American Civil Liberties Union. Many people believe that bail is a part of a justice system that discriminates against minorities and low-income defendants. If you do not know how the bail system in the United States works, here's a quick summary: If you are arrested and a judge grants you bail but you cannot afford to pay the full amount, you, a friend or relative can go to a bail-bond place and they will essentially post the cash and help release you with only a 10% charging fee of the bail amount. After you are released, you are most likely going to be on some form of pre-trial probation according to the bond place's terms and they can seize collateral if you miss court or skip bail. The reason Endeavor Capital and many other financial firms have abandoned the bail-bond industry is because of falling revenues, criticism from activists and uncertain political environment.

This article was interesting to me personally, because I have an interest in law and many other social-political issues. I know that the bail industry has recently begun going under major changes because of state politicians looking at the value of bail and these changes have been affecting local laws as well as how judges release defendants pre-trial. Many states and counties have began eliminating cash bail for low level and nonviolent offenders. I think this has relevance in what we are learning in class because not only are bail-bonds a huge industry and competitive, they have a specific target market which is now being threatened by an external market environment. 

These changes also have major implications on not just the political aspect but the business aspect of the bail-bond industry and the effect this had on various financial firms like Endeavor. The industry has entered a period of decline, it has experienced two straight years of declines. The amount of bail bonds written fell about 10% to just over $14 billion in 2018. From 2009 to 2016 the industry had grew by about 25%. 

Link: https://www.wsj.com/articles/criminal-justice-reforms-are-squeezing-the-bail-bond-industry-11582299332 Updated Feb 21, 2020 12:57 pm ET by Laura Kusisto