On Tuesday, while most of us were preparing to play the State of the Union drinking game, the Wall Street Journal ran a fascinating article on its front page exposing the role that short-sellers, those investment gurus who bet on specific stock prices falling, have been playing in the development of federal guidelines regulating for-profit colleges. Advocacy by these investors runs the gamut from initiating letter-writing campaigns to testifying before Congress in the hopes of passing rules that would seriously hinder these colleges’ bottom lines — forcing, you guessed it, their stocks to drop.
Of course, short-selling is a common and accepted practice, and there is nothing wrong with artfully and accurately predicting which industries will flourish and which will flounder. There is, however, a problem when those same short-sellers have inside information or are actively influencing the price of the stocks they’re hedging against. You can’t, ethically, have a dog in both hunts, so to speak.
When a controversy like this is so blatantly laid bare, it puts a taint on the entire issue. Who else is advocating for stricter guidelines and more oversight in this sector? Who else would want untenable controls placed on this particular industry? Who else has a dog in this hunt, and why?
On this issue, one needn’t look far; in fact, we can just watch cable news — for the commercials. What are all those sickly-looking ads against college choice? Why it’s our old friends at the Center for American Progress (CAP), working under the auspices of their “sister” organization, Campus Progress, and running a million-dollar campaign on the exact same side of the issue as the wealthy short-sellers. That can’t be right. Don’t they have communities to organize, stores to picket, whales to save and murderers to pardon? Why are they hunting with this dog, and why now?
The short-sellers have been raising eyebrows all over town. In fact, a left-leaning watchdog group, Citizens for Responsibility and Ethics in Washington (famously responsible for the take-down of Tom Delay), was among the first to write about investors’ manipulation of education regulations for financial gain. Another left-leaning investigative reporting group, Pro Publica, published a harsh exposé on the underhanded methods used by groups secretly funded by short-sellers to get support for the most controversial regulations targeting for-profit colleges.
So why is CAP, with its leftie credentials, actually doing the short-sellers’ dirty work? Surely not all corporations are bad, and certainly not those that provide higher education. I feel like I just heard…who was it now…oh yeah, our liberal president, mention, “Over the next ten years, nearly half of all new jobs will require education that goes beyond a high school degree.” And surely it can’t be that they’re against all kinds of profit. If they were, they wouldn’t receive any funding at all. And boy oh boy, do they receive funding. The dog is picking up a scent here…
Where is CAP getting the money for this campaign? As a 501(c)(3) they are not legally obligated to disclose where their $25 million in operating funds comes from, and a large part of it is known to come from usual suspects like George Soros, who loves to throw money at any liberal group willing to push his issues (Snopes, Media Matters, Moveon.org), report what he wants (NPR) and, coincidentally, made his billions with a hedge fund. On an issue this narrow, with only one lucrative target, it’s worth asking where the funds earmarked for this specific spending spree are coming from. Could it be the same short-sellers that insist on testifying before Congress regarding issues they have no academic knowledge about? If that is, in fact, the case, shouldn’t CAP disclose that they’re running these “issue” ads to assist their short-seller funders in making millions of dollars? Of course they won’t, because ultra-liberal groups like CAP don’t hold themselves to the same transparency standard they insist on for the rest of us. If, however, the truth really matters, this dog just won’t hunt.
Natasha Mayer is a political consultant in Washington, D.C. Her Twittter handle is @natashamayer