Outrageous -- Hedge Funds Using Obama Administration to Gut Their Short-Selling Targets
Living in Phoenix I know a number of people who work for Apollo (University of Phoenix). They have obviously been appalled by the Obama war on for-profit colleges and the egregiously-flawed report that came out last year. Several have told me they have complained for a while that certain hedge funds were pushing this initiative in order to make money off of short positions on their stock. I thought this was a bit paranoid, but now the accusation is coming from third parties, even those on the Left:
A proposed regulation from the Education Department threatens to devastate for-profit career or trade schools, but one thing is even more controversial than the regulation -- how it was crafted.
Education Department officials were encouraged and advised about the content of the regulation by a man who stood to make millions if it were issued.
"Wall Street investors were manipulating the regulatory process and Department of Education officials were letting them," charged Melanie Sloan of a liberal-leaning ethics watchdog called Citizens For Responsibility and Ethics in Washington....
Among others, Sloan is referring to Steven Eisman, a hedge fund manager and a figure in the book "The Big Short," who testified in the Senate against for-profit career or trade schools, attacking them as "fundamentally unsound."
At the same time, he was betting that the stocks of those companies would fall, a practice known as short selling. "Making sure that they were going to be defamed and that their value was going to be depressed," said Harry Alford, head of the National Black Chamber of Commerce, who worries about the schools because they serve many minority students.
Simultaneously, through emails and conference calls, Eisman was advising Education Department officials -- and one White House adviser -- in detail on how best to write the new regulation, which he estimated would reduce the schools' earnings by as much as 75 percent.
The proposed regulation from the administration is aimed at what are known as career or vocational schools. The rule would cut federal aid to programs where student debt levels are deemed to be too high and where students are struggling to repay their loans.
In other news, everyone seems A-OK with kids in not-for-profit universities running up $200,000 debts to get such lucrative, workplace-ready degrees as women's studies, comp. lit. and poetry.
