I will protect your pensions. Nothing about your pension is going to change when I am governor. - Chris Christie, "An Open Letter to the Teachers of NJ" October, 2009

Monday, August 1, 2011

Just Smell the Money!

Like the aroma of ripe peaches in July!
Senator Charles E. Grassley is examining whether Education Department officials disclosed confidential government information to hedge fund managers, including the well-known stock picker Steve Eisman. 
The inquiry stems from the agency’s recent efforts to overhaul the for-profit collegeindustry, which has been accused of saddling students with huge piles of debt. Expecting tough new rules in the wake of the controversy, Mr. Eisman and other hedge fund traders placed huge bets against the industry. In a letter this week, Mr. Grassley questioned the education secretary, Arne Duncan, about the agency’s ties to the hedge fund world and the lack of policies restricting contact with Wall Street players.
“If it is indeed the case that Department of Education employees were on familiar terms with hedge fund short-sellers, this raises serious questions regarding the internal controls,” Mr. Grassley, Republican of Iowa, said in the letter. “My concerns center on the possibility that senior Department of Education staffers may have provided information to short-sellers during the time leading up to the public release” of new regulations. 
The Education Department’s internal watchdog is already looking into whether certain traders influenced the for-profit college rules. Senator Joseph I. Lieberman, an independent from Connecticut, wrote to Mr. Duncan in April to request an update on the outcome of that investigation.
Mr. Eisman — the former manager at FrontPoint Partners who made a fortune betting against subprime mortgages — was one of several investors to lobby the agency about the potential regulations. In an e-mail sent to agency officials in May 2010, he pushed for tough new restrictions on the colleges, according to agency documents reviewed by The New York Times.
Last month, a report by the Project on Government Oversight, a nonprofit watchdog group, raised questions about Wall Street’s influence over the agency. The group obtained several e-mail chains between agency officials and hedge fund traders who discussed the for-profit college rules.
Hey, look, Grassley's a Republican, OK? Obviously, there's nothing here. Hedge fund managers are interested in eduction out of altruism, right?

Uh, right?



calugg said...

Here's where Chuck Grassley is not your "typical Wall Street" Republican. He's from Iowa....where public education is the state church (K-University). I spent 6 years in Des Moines (1985-1991), and was always impressed by the devotion the state residents had towards public education.

If Grassley smells a rat, lord help the suspected rodent. He can be down right "pit-bullish" on some things.

Stay tuned....

Anonymous said...

Um, this is about for-profit colleges (not K-12), and Steve Eisman isn't one of the hedge fund managers (Whitney Tilson, etc.) that all of the folks on your side love to whine about.

Guilt by association at best.

Duke said...

Yep - like I said, nothing to see here. Move along...

calugg said...

But my essential point is in Iowa, the state U's are the church. Private u's are seen as somewhat lesser ("Whatzamatter with you? You're not going to Iowa, Iowa State or UNI? Jeez, you must have bombed the ACTs").

Private for-profit u's? Beyond the pale. So, Grassley is going to be a pit bull on this. He's not the brightest bulb in the box, but when he gets a burr in his saddle....

Duke said...

Interesting. Grassley's had his moments on other things, but the independent Republican is going the way of the dodo.

Nice to see some guts here.