The SEC should investigate the Dept. of Education

Natasha Mayer Political Consultant
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I’m a big fan of giving the benefit of the doubt to issues I don’t agree with. My thinking is always that if there’s a ban, a loophole or a hurdle, it was placed there not to piss anybody off, but because of some honest, albeit sometimes wrong-headed, motivation to do the right thing. When I discover, however, that the driving force is malevolent, illegal, or just plain immoral, all bets are off.

With that in mind, I’ve been trying to analyze the motivations of the people who are going after one business model — for-profit colleges — in so many different ways that it makes my head spin: trying to add another layer of cumbersome regulations through the Department of Education, holding hearings before Congress, running ads on cable, and even putting out a fraudulent Government Accountability Office report. Not putting them out of business directly but, drip by drip, drowning them into bankruptcy.

What’s especially striking here is that for-profit colleges are not villainous by any stretch of the imagination. They provide education and crucial training for specialties not covered by traditional four-year colleges and universities, and pick up the slack by accepting students who community colleges can’t or won’t accommodate. People can earn their G.E.D.’s, learn specific technical skills or even study online, all in an effort to improve their lives. But don’t take it from me; ask the president of the Urban League, or the former president of Colorado State University, or eleven members of the Congressional Black Caucus, all of whom agree that any restrictions on for-profit schools would disproportionately harm non-traditional students who rely on these colleges for their post-secondary educations.

So, why the fight? What reason, if any, is there to put roadblocks in the way of an industry that arguably does more to further President Obama’s pledge that the United States have the highest percentage of college graduates in the world than any other private business?

With most unnecessary and ultimately harmful regulations, unfortunately, the answer is only found when one identifies the players, follows the money and figures out who benefits. So let’s look at the cast of characters and see what pattern emerges: The Center for American Progress (CAP) has funded a TV campaign against for-profit colleges. CAP counts among its major donors George Soros, who not coincidentally made his billions from a hedge fund and was recently fined for illegal stock market manipulation. Huh. OK, but one shady profiteer in the mix isn’t a pattern, plus he contributes to all sorts of loony causes . . . Then there’s Steven Eisman, a Wall Street “short-seller” who was allowed to testify before Congress in favor of stricter guidelines. OK, it’s a bit random that there would be two, but I mean . . . Oh, I forgot to mention Manuel Asensio, a debarred short-seller who lobbied the Department of Education against for-profit colleges. In 2010, the Securities and Exchange Commission (SEC) denied a request for Asensio to associate with an investment firm, because his “re-entry into the securities industry at this time would pose a serious risk to the investing public.” So instead of fronting a financial firm, he decided to lobby for tighter regulation on a publicly traded industry. I think we’ve found a pattern . . . what are the odds that three men known to exploit and illegally manipulate stocks would all agree on such a narrow rule in a fairly obscure industry and lobby for it publicly out of altruistic motives?

The Center for Responsibility and Ethics in Washington (CREW) recently demanded that interactions between the Department of Education and short-sellers be made public and sent a shocking letter to the SEC. In it, CREW reveals emails guiding, suggesting and even dictating moves to the undersecretary of education, reporting fluctuations in education stock values and implying the receipt of advance knowledge on hearing outcomes. Last week, Senator Tom Coburn acknowledged the impending scandal and mentioned that the government officials involved could face jail time. U.S. Department of Education Inspector Kathleen Tighe even admitted that it would make sense to work with the SEC on their investigation. And with all that evidence, my benevolent benefit of the doubt has gone out the window. These obtuse regulations are motivated by greed and nothing else. That’s malevolent, immoral and illegal.

Natasha Mayer is a political consultant in Washington, D.C.