Issa hearing on new regulation skips scandals

Jonathan Strong | Contributor

It’s a congressional hearing that’s notable for what it’s not addressing.

Friday, a panel on the House oversight committee chaired by California Republican Rep. Darrell Issa is holding a hearing about a controversial new regulation enacted June 2 by Education Sec. Arne Duncan.

The regulation put strict new rules on for-profit or “career” colleges, conditioning federal aid to students of the schools to numeric thresholds on how much debt they incur or how quickly they repay federal loans after attending.

The hearing, before a subcommittee chairman and conservative leader, Rep. Jim Jordan, will address the impact of the regulation on the economy. But it won’t address a series of scandals that accompanied its enactment.

Those include an error-ridden report by the Government Accountability Office (GAO) and a pending Inspector General investigation over whether Wall Street investors were given early notice about key regulatory decisions, allowing them to profit from the insider information.

Issa promised to hold the hearing after Rep. Edolphus Towns — formerly the top Democrat on the oversight committee — asked the California Republican to investigate whether the Education Department’s process was “even handed, open-minded and transparent.” (GOP congressmen call on Bureau of Prisons to remove inflammatory Islamic texts)

Though honest men could disagree “whether the [new Education Department] regulation as written is right or wrong … one principal [sic] on which we all should be in agreement … is a rule-making that allows non-elected government officials to establish policy and have the force of law must be fair, unbiased, and transparent,” Towns wrote in a May 24 letter requesting the hearing.

But the hearing will instead focus on whether the content of the new regulation is “right or wrong,” in Towns’ words.

“Friday’s joint hearing will explore how these new regulations will affect job creation and will also assess the impact the rule could have on students,” said Issa spokeswoman Becca Glover Watkins.

The witness list includes Harry Alford, the head of the National Black Chamber of Commerce who has argued strenuously against the regulation, Karla Carpenter, a graduate of a for-profit college, Herzing University, that will be subject to the strict new rules, and Dario Cortes, the president of for-profit school Berkeley College.

While Alford, Carpenter and Cortes are likely to provide interesting perspectives on the impact of the regulation, called “gainful employment,” they aren’t experts on the myriad ethical controversies facing the Education Department, GAO and top lawmakers.

The topic omission is especially pronounced because scandal and impropriety are the bread and butter of the oversight committee. (Holder wins two victories in effort to lawyer up against terrorism)

“He’s oversight,” said Anne Weismann of Citizens for Responsibility and Ethics in Washington (CREW) about Issa, “it would seem the issues addressed in the Towns letter would be in the bailiwick of the oversight committee.”

“It’s a very odd angle for Chairman Issa to be taking,” Weismann said, “if we can’t get oversight to look at this, who will?”

Towns’ letter included a list of allegations and disquieting facts about how the regulation was finalized.

The list raises questions about the role of Wall Street short sellers who lobbied for the strict rules, hoping to profit from their enactment when the sectors’ stocks tanked as a result of the regulation. It also notes the Education Department relied in part on an error-ridden GAO report on the for-profit schools.

As reported by The Daily Caller, Issa has been investigating an undercover sting unit at GAO that produced that error-ridden report on for-profit colleges, including interviewing the team that produced the report, staining the agency’s normally unimpeachable reputation.

The report was crucial to providing political momentum for the regulation. But in November, GAO issued a slew of corrections; the corrected version of the report paints a less critical picture of the schools.

Issa’s investigation is focused on the undercover team itself, not the for-profit proof per se. The team is described as having a history of faulty work.

“They’d gotten into trouble before,” said a second source close to the issue, echoing the accounts of several, “that was the team you went to when you wanted a report to go a certain way.”

As reported by TheDC, an internal GAO evaluation about what went wrong on the for-profit report faulted pressure from far left Democratic Sen. Tom Harkin as the reason for some of the reports “most obvious inaccuracies.”

The evaluation said “congressional staff” demanded the inclusion of numerous details in the report and, facing the “extreme short time frames” given to complete it, GAO “stretched whatever we could find” to fill in a key detail.

Harkin has angrily denounced the GAO’s allegations. (Ron Paul calls for end of TSA)

Issa’s inquiry could resolve to what extent politics interfered with the report. But the California Republican might not even release his findings publicly, let alone answer what specifically led to the errors.

GAO already reorganized the undercover sting unit and replaced Gregory Kutz, who had led it, to Issa’s praise.

Meanwhile, a pending lawsuit by representatives of the for-profit schools over the GAO report is pressuring the agency not to admit to any further culpability. If GAO retracted the report, for instance, it could add to their legal liability.

Another factor in the mix is congressional lawmakers – Democrats and Republicans – who’d rather not put a magnifying glass up to GAO’s mistakes. The undercover sting unit has its defenders on Capitol Hill.

Issa spokeswoman Glover Watkins said the hearing Friday won’t preclude other oversight efforts into the process of the regulation and the GAO report.

“While the hearing will focus on the job killing effects, this focus should not be seen as a limitation on future oversight efforts related to the process that led to this flawed rule,” she said.

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