Category: Corporate Statism

For profit education

~ susie

So this is how it always works. You design a “need” that happens to coincide with what you want to sell, and then you pay some politicians to agree with you:

Reuters has the scoop on an event that took place earlier this week where nearly a hundred education profiteers — ranging from executives at testing companies to private equity moguls eager to invest in education technology — met at a swanky Manhattan club to cheer on the privatization of the U.S. education system:

The investors gathered in a tony private club in Manhattan were eager to hear about the next big thing, and education consultant Rob Lytle was happy to oblige. Think about the upcoming rollout of new national academic standards for public schools, he urged the crowd. If they’re as rigorous as advertised, a huge number of schools will suddenly look really bad, their students testing way behind in reading and math. They’ll want help, quick. And private, for-profit vendors selling lesson plans, educational software and student assessments will be right there to provide it.


Reuters goes on to note that education has become a huge business in just the past seven years. In “the venture capital world, transactions in the K-12 education sector soared to a record $389 million last year, up from $13 million in 2005.”


The policies that have allowed for these education profiteers to get involved with the system have been pushed by politicians from both parties, and many of them — such as the aggressive expansion of charter schools and high-stakes testing — have been endorsed both by President Obama and Mitt Romney, although Romney appears to be much more supportive of outright privatization.


Many of the privatization architects who attended the Manhattan confab are also political donors. According to Federal Election Commission data, Lytle was a Romney donor in 2007, giving $500. Meanwhile, Princeton Review and 2Tor’s John Katzman has spread thousands of dollars over numerous politicians from both major political parties, giving $4,800 to Sen. Michael Bennet (D-CO) while also donating tens of thousands to Sens. Harry Reid (D-NV), Kirsten Gillibrand (D-NY), Lindsey Graham (R-SC), Sam Brownback (R-KS), and others over the past decade.


Katzman has been particularly insistent in his desire to see large chunks of the education system privatized. At the event, he apparently “urged investors to look for companies developing software that can replace teachers for segments of the school day” — a convenient way for schools to do away with a number of their teachers altogether.

Hypocrisy, thy name is Tim

~ susie ~ 1 Comment

Money talks, bullshit walks. My goodness, the administration is speedwalking lately! Neil Barofsky on why Ed DeMarco won’t be fired:

Although one can argue whether principal reductions are the right way to address the ongoing housing slump – I have championed principal reductions for years but acknowledge that there are passionate arguments on both sides of the issue – no one should be fooled that the administration’s entreaties to DeMarco are anything but political posturing. As I recount in my recently released book, Bailout, during my time as the special inspector general in charge of oversight of the TARP bailouts, Treasury Secretary Timothy Geithner, using the same justifications now offered by DeMarco, consistently blocked efforts to use TARP funds already designated for homeowner relief through a principal reduction program that could have a meaningful impact on the overall economy.


For example, in 2009, $50 billion in TARP funds had been committed to help homeowners through the Home Affordable Modification Program (HAMP), a program that the president announced was intended to help up to 4 million struggling families stay in their homes through sustainable mortgage modifications. Hundreds of billions more were still available and could have been used by the White House and the Treasury Department to help support a massive reduction in mortgage debt. But Geithner avoided this path to a housing recovery, explaining that he believed it would be “dramatically more expensive for the American taxpayer, harder to justify, [and] create much greater risk of unfairness.” Treasury amplified that argument in 2010, after it reluctantly instituted a weak principal reduction program in response to overwhelming congressional pressure. That program incongruously left it to the largely bank-owned mortgage servicers (and to Fannie and Freddie) to determine if such relief would be implemented. In response to our criticism that the conflicts of interest baked into the program would render it ineffective unless principal reduction was made mandatory (when in the best interests of the holder of the loan), Treasury reinforced Geithner’s early statements, refusing to do so primarily because of fears of a lurking danger: the ”moral hazard of strategic default.” The message was clear: No way, no how would Treasury require principal reduction, even when Treasury’s analysis indicated it would be in the best interest of the owner, investor or guarantor of the mortgage.


Indeed, at every critical juncture at which Treasury could have unilaterally implemented meaningful principal reduction, the same argument now presented by DeMarco was hauled out as an excuse for inaction.


Which is why it should not be surprising that rather than engage in bold action, such as replacing DeMarco with a recess appointment, the administration has responded with only a letter that seems primarily intended to distract attention from its own failed policies. The truth is that the administration – whether through principal reduction or otherwise – has never prioritized coming up with an effective approach to helping homeowners and reviving the housing market, even when it had a multi-hundred-billion-dollar TARP war chest at its disposal.


By late 2009, it was becoming apparent that HAMP would never come close to its stated goals. The program was designed poorly, and Treasury refused to hold the banks accountable for the abuses to which they subjected homeowners in the program. In one meeting I attended, after Secretary Geithner was pressed about the flaws in the HAMP program, he justified Treasury’s actions by explaining that the program would “foam the runway” for the banks by extending out the foreclosure crisis over time. In other words, Treasury was far more concerned with using HAMP to soften the blow of the housing crisis for the banks – just as the FAA once recommended spreading protective foam over a landing strip to prevent a disastrous crash of a malfunctioning airplane – than with helping millions of struggling homeowners. Now, three years later, with a tightening presidential election and a Democratic base disillusioned by the government’s abandonment of its promise to help homeowners (less than 8 percent of the funds originally allocated in TARP for foreclosure relief has actually been spent), Geithner and the administration would like to present themselves as having undergone a conversion.


Let’s be very clear about what is going on here. This is not a conversion – it is a political convenience. Geithner may well be correct when he wrote in a letter to DeMarco that an effective principal reduction program would “help repair the nation’s housing market” and that the refusal to do so is not “in the best interest of the nation,” but it is his own policies that are primarily to blame for where we are today.


As we enter the final phase of the election campaign, we need to end the meaningless political posturing and recognize that as a country we have severely mishandled the housing crisis. It may be a fair debate whether we should have gone with the “all in” approach that I and others have advocated or the “do nothing and let the market find its natural bottom” approach advocated by many conservatives. There should, though, be little question that the chosen policy – a “foam the runway” approach that assisted the banks and only a fraction of the homeowners that could have benefited – has been a failure and has left us stuck in economic mediocrity. Geithner wrote this week to Demarco: “You have the power to help more struggling homeowners and help heal the remaining damage from the housing crisis.” If only he had heeded his own advice.

Insurance company pays more than they have to

~ susie

I thought this was right up there with “man bites dog”:

Arijit Guha, an Arizona State University graduate student, returned from a trip to India with a stomach ache and only one month later learned he had Stage IV colon cancer.


As tough as his diagnosis was at the age of 30, learning that his insurance company would place restrictions on paying for his cancer treatments was almost as gut-wrenching.


Guha had a policy under the university’s health plan for which he paid $400 a month out of pocket, but its carrier, Aetna, had an annual ceiling on pay-outs. After surgery and chemotherapy, he had exhausted the lifetime $300,000 limit.


The Affordable Healthcare Act has eliminated lifetime limits, but until Aug. 1 that did not include student health plans, according to the Chronicle of Higher Education.


Outraged, Guha turned to Twitter and other social media to make his case, one that affects millions of Americans who face staggering medical bills.


But last week, Aetna CEO Mark T. Bertolini, a former paramedic who has had his own share of medical crises, tweeted directly with Guha and agreed to pay “every last penny” of his bills.


“The system is broken, and I am committed to fixing it,” said Bertolini on his Twitter account, according to the Arizona Republic, which first covered the story. “I am glad we connected today and got this issue solved. I appreciate the dialogue no matter how pointed. I’ve got it and own it!”


Guha, now 31, told ABCNews.com, “I am incredibly pleased and in shell shock and trying to figure out what just happened. It’s a huge relief.”

Cash before students

~ susie

Heh. This Washington Post story has to walk such a thin line, considering that their Kaplan division made so much more money for them than their newspaper holdings. Almost always, there is little a for-profit college offers that you can’t get at community college for a lot less money. As someone who was a recruiter at one of these money mills, take my word for it: The for-profit college that’s worth the enormous amount of money you’ll owe is the exception, not the rule:

A Senate committee that successfully pressed for tighter regulation of the for-profit higher education sector published a report Sunday that said the business had put shareholders before students.


As of 2009, the report said, three-quarters of students in for-profit colleges attended institutions owned either by publicly traded companies or private equity firms. It said the schools excelled at recruiting students, but not necessarily at retaining them: More than half of students at for-profit schools who enrolled in the 2008-09 academic year left without a degree, the report found. Half of all non-finishers ended their studies within four months.


The findings are in line with concerns voiced last year when the Department of Education imposed stricter rules on for-profit schools that benefit from federal student loans.


The new report is titled “For Profit Higher Education: The Failure to Safeguard the Federal Investment and Ensure Student Success.” It concludes a two-year investigation by Sen. Tom Harkin, an Iowa Democrat who chairs the Senate Committee on Health, Education, Labor and Pensions. Including appendices, the document totals about 800 pages.


Investigators studied operations at 30 for-profit higher education companies, including industry leaders Apollo Group, Education Management Corp., DeVry and Kaplan. Kaplan is owned by the Washington Post Co.


“We uncovered two very big problems in for-profit higher education,” Harkin said in a statement. “One, billions of taxpayer dollars are being squandered. And two, many for-profit schools are doing real, lasting harm to the students they enroll.”

How income inequality killed the music business

~ susie

Yet another reason to despise Mitt Romney! Fascinating post from entertainment attorney and music consulant Bob Lefsetz:

So Reagan lowers the tax rates in the eighties and suddenly incomes start to diverge. And the record execs don’t want to be on the wrong side of the divide. They no longer care about music, they just want money. The acts are disposable. It devolves into formula by the nineties. And by time MTV stops playing music, at the advent of the twenty first century, after the executives have wrung all the cash out of both new acts and old, via overpriced CDs, the scene was dead.


And I don’t know when it’s going to come back.


The acts have no soul, no backbone anymore. The first thing they want to do is sell out to the Fortune 500, do endorsement deals. You see they want the money. And their handlers are imploring them to do this, because they want their commission. Everybody’s chasing an ever-shrinking piece of the pie. And anybody who is smart is staying out. What did David Geffen say last week, “I’d kill myself if I got into the music industry now.”? As for the consumer, he’s screwed incessantly. Wall Street rolled up the concert business and ticket prices went through the roof. And very few acts want to go to paperless and keep prices low, because they too want the cash, they too want to live the lifestyle of the rich and famous. They’re chasing the bankers, who make millions year in and year out. Very few musicians do, but that doesn’t mean they don’t try.


Sure, banking is boring, but tech is not. Which is why a huge swath of the youth make apps, are entrepreneurs, they want to be in control of their own destiny and make a fortune, the sky’s the limit in tech. But there’s a definite ceiling in music.


And the radio stations were rolled up, hell, Bain Capital and Thomas H. Lee Partners took Clear Channel private and squeezed out billions, despite the company being in extreme debt, and now stations have innumerable commercials and they all sound the same. And they’ll only play what’s on the major labels. Who won’t sign something left field without instant radio play, they don’t want to take that chance, there’s too much money involved.


The rich are getting richer and the musicians are being left out. And yes, piracy contributes to income deprivation, but it’s more complicated than that. Adele sold ten million albums in America and she doesn’t do any endorsements. Her music is perceived to be honest and from the heart. That’s a role model for you. But no one’s following in her footsteps. No one is taking a risk. Then again, you can’t manufacture Adele on an assembly line, you can just recognize genius and nurture it. But that’s no longer the job of the music industry.


The fact that so many are so wealthy is putting a huge dent in our cultural institutions. Sure, there were scalpers in the sixties and seventies, but no one paid ten or twenty times face value, because no one had that kind of cash. You could get a good ticket back then. It’s almost impossible today.