It’s not hard to imagine that letting boiler rooms push poor folks into taking out impossible-to-shed federal loans is a really bad idea, particularly when it’s to pay big bucks to attend your crappy for-profit “college.”
The Huffington Post’s Chris Kirkham has a long look today at how one for-profit education company, EDMC, went downhill after Goldman Sachs & Co. took it over, rewiring the corporate culture to emphasize sales tactics seen in the gutter of the subprime-mortgage shops.
Consider this sales brochure the HuffPost got its hands on headlined: “WHY?…WHY?…WHY?: Keep asking! WHY? WHY? WHY?”
Its first three bullet points:
1. Build Em Up!
2. Break Em Down! Find the PAIN!
3. Build Em UP!
Standard sales tactic in the subprime culture, for sure, but appallingly manipulative all the same, as this former rep says:
Suzanne Lawrence, who worked in admissions at Argosy University online in 2009 and 2010, remembered recruiting a woman for online classes who had never used the Internet and had no email address. She thought the student wasn’t a good match, but she was instead instructed to help the woman set up a Gmail account and get enrolled.
“The scales are so tipped; these people have no way of possibly making a good decision,” Lawrence said. “It was like we were used car salesmen. We would basically psychologically manipulate people into doing this. My master’s was in clinical psychology, and it was like I was using my powers for evil.”
Companies like Goldman-owned EDMC found the perfect poverty business. Payday loans and NINJA mortgages might not be paid back, but these things are backstopped by Uncle Sam. And the government prevents its student loans from being discharged even in bankruptcy. This is 19th century stuff, with the federal government as enforcer. Kirkham captures that in his kicker:
“The financial brilliance behind these schools is that unlike the mortgage industry, when this bubble bursts, these loans are guaranteed to these companies,” said Lawrence, the former Argosy University recruiter. “They’re backed by the government, so it’s not them that’s going to go under.”
The sordid state of the for-profit education industry has been spilling out for a while now, though. What’s smart about the HuffPost’s angle is that while it reports plenty of new things here, it also zeroes in on how Wall Street financed the activities, just as it did with the subprime predatory lenders. And it makes a good case that finance’s richest company not only financed it, but stepped on the gas when it bought EDMC in 2006.
The company’s board was all but replaced within a year of the sale to Goldman and Providence Equity Partners. It hired as CEO Todd S. Nelson, who ran the University of Phoenix when it engaged in predatory practices that resulted in a $10 million settlement with the Bush administration. The HuffPost interviewed “more than a dozen” former employees, a fair number of whom go on the record to talk about how the culture shifted once the Goldman group bought the firm.
Good work.
You create a government boondoggle that doles out money - and people will find a way to grab it. But in Chittumland, nothing is ever the government's fault or the consumer's fault - it's always the evil corporate interest dragging down society.
Well the truth is pretty straightforward - the gubmint doles out (or puts taxpayers on the hook for) money to schools to pay tuition and expenses for morons. And (surprise, surprise) businesses figure out a way to get as much of this money as they can.
You CAN'T blame the companies for using legal means to make money.
You CAN blame the idiots who sign up for these schools.
And you SHOULD blame the government for facilitating this wasteful stupidity.
Now don't get me wrong... If you can show me an example of criminal activity - then go nuts on the bastards. But this just appears to be the latest installment of Ryan's Kooky Corporate Black Helicopter Conspiracy Theory.
In Chittumland, corporations are supposed to forego revenue for the common good. And serve as voluntary unpaid sales tax collectors for the common good. And pay employees more than market wages for the common good. Etc. Oh... And never make any money... Or lose any money (unless you're Solyndra, of course).
But the people who cheat on welfare? Or the Californians who cheat on their sales taxes by failing to declare their Amazon purchases? Or the regulators who sat on their hands while Bernie Madoff and Ken Lay stole billions?
Nothing to see here... Move on..
#1 Posted by padikiller, CJR on Sat 15 Oct 2011 at 10:32 AM
three points:
#1.
did anybody bother to investigate recruitment practices in state school and community colleges? I guess not because there is no " Goldman " behind them, meaning, it is not appealing for demagogues. Until you put under same microscope ALL schools not only " for profit" it is a punitive and it is a political hit job against another "for profit" industry.
#2.
if taking state guaranteed loans is wrong for " for profit" schools how then state government direct financing of state schools and community colleges is not the same? how the tax expamt status for private shcools is not the same?
#3 why government goes after EDMC and not all for profit school which use same practices ( all of them use same practices and everybody knows that) ?
pick your choice:
A. because EDMC was the most vocal against "gainful employment regulation"
B. chairmen of EDMC is a prominent republican spouse of an active republican senator
C. The only for profit company is which belong to Goldman is EDMC and it is very politcally beneficial in this environment to go after Goldman
my choice is " all of the above"
#2 Posted by andre, CJR on Sat 15 Oct 2011 at 12:55 PM
When an entity accepts money in exchange for goods and does not deliver the promised goods, that is fraud.
These College Inc. schools, particularly the University of Phoenix, are known for making heavy promises in their hard sell pitch and delivering sub standard products that are missing such essentials as practicums in their nursing program.
The goods they provide are worthless and the sellers use high pressure, boiler room, sales tactics.
Recruiters told people with felony criminal records that pursuing a criminal justice degree would allow them to achieve their dreams of joining the FBI -- an impossible scenario, because the bureau is barred from hiring people who have been convicted of such offenses. They convinced students with no access to a computer or Internet that they could use the local library for classes, even though they would need to save files and download specific software to access coursework.
When they are making promises from the article like:
"Recruiters told people with felony criminal records that pursuing a criminal justice degree would allow them to achieve their dreams of joining the FBI -- an impossible scenario, because the bureau is barred from hiring people who have been convicted of such offenses. They convinced students with no access to a computer or Internet that they could use the local library for classes, even though they would need to save files and download specific software to access coursework.
It just got to the point where I felt like I was lying to these people on a regular basis," said Patrick Flynn, a recruiter at EDMC's South University online from 2006 through 2009, when he quit. "Honestly, I just felt dirty doing the things I was doing. It's almost like they were trying to make me take advantage of people's belief in what this education was going to get them, when I didn't buy into it myself."
That is fraud. And that is the business model because a school that operates on wallstreet capitialism, in which all other values are sacrificed to increase
bonusesshareholder value, your emphasis is to cast the widest net for customers and provide them service at the lowest cost to yourself. Maximize ROI."A current admissions employee at South University said the drive for numbers has created a recruiting staff that could care less about the well-being or success of the students who are enrolled.
"They're wolves; they're hunters," said the current employee. "They have one objective: They're there to make money and get students.""
"But while the infusion of capital from Goldman and know-how from the former Apollo executives has proven beneficial to shareholders, students have fared less profitably: Student loan default rates have grown substantially at several of EDMC's schools.
The most recent student loan default data, released this month, showed that the percentage of students defaulting within two years of leaving at the Art Institute of Pittsburgh nearly doubled, from 7.9 percent in 2008 to 15.4 percent in 2009. South University's default rate increased from 7.9 percent to 13.5 percent between 2008 and 2009.
According to a JP Morgan Chase analyst report in 2010, EDMC's schools have among the highest tuition of publicly traded corporations in higher education. Tuition at EDMC's Art Institutes schools can average about $50,000 for an associate's degree and between $77,000 to nearly $100,000 for a bachelor's degree.
In August, the Justice Department and attorneys general from five states, including Florida, California and Illinois, alleged widespread fraud in EDMC's recruiting model, arguing that admissions employees were compensated entirely based on the number of students enrolled."
There's that f-word again that paidman just seems to ignore no matter where or how often it shows up.
#3 Posted by Thimbles, CJR on Sat 15 Oct 2011 at 01:46 PM
600 chars? You kill me. Where was I.
"According to a JP Morgan Chase analyst report in 2010, EDMC's schools have among the highest tuition of publicly traded corporations in higher education. Tuition at EDMC's Art Institutes schools can average.."
about $50,000 for an associate's degree and between $77,000 to nearly $100,000 for a bachelor's degree.
In August, the Justice Department and attorneys general from five states, including Florida, California and Illinois, alleged widespread fraud in EDMC's recruiting model, arguing that admissions employees were compensated entirely based on the number of students enrolled."
There's that f-word again that paidman just seems to ignore no matter where or how often it shows up.
#4 Posted by Thimbles, CJR on Sat 15 Oct 2011 at 01:50 PM
Is there really fraud? Prosecute the person who committed it. Start with the kid who admitted to lying to prospects, and then prosecute all the way up the ladder.
Schools benefiting from fraud? Stop paying for morons to borrow money they'll never repay to go the school.
However, you can't blame companies that use legal means to snatch boondoggle money. The blame lies in the boondoggle.
There's nothing wrong with a school that wants to "make money and get students." Indeed, this is what schools are SUPPOSED to do.
As an side, I take exception to this: "Recruiters told people with felony criminal records that pursuing a criminal justice degree would allow them to achieve their dreams of joining the FBI -- an impossible scenario, because the bureau is barred from hiring people who have been convicted of such offenses"
Anyone who has seen "Catch Me If You Can" or "Goodfellas" knows that this statement isn't true. There are plenty of felons on the FBI payroll.
#5 Posted by padikiller, CJR on Sat 15 Oct 2011 at 02:21 PM
I can't exactly figure out why 'for profit' schools are held to a higher standard than taxpayer-supported schools. Don't the latter sometimes encourage kids to think a degree in Women's Studies, financed by student loans (which colleges happily use to jack up tuition and textbook costs) has economic value? My guess is that the universities are upset at the competition, and have urged their allied politicians in the Democratic Party to rough the for-profits up.
If Ryan and the rest of the orthodox, NY or other urban-based press used the misdeeds of for-profit schools to examine the student loan system and how it has driven up college costs since its inception, or looked into price collusion by the university system, we would get better journalism. But the focus is narrow for political reasons. Those for-profit schools exist because the ostensibly 'not for profit' university system (which seeks only 'funding' when it is feeling greedy, a distinction that is meaningless to the consumer) has run an industry whose costs risen by about double the rate of inflation over the past 30 years, coincidentally around the time federal student loan programs went on steroids. But the flat-earth left sees no connection. Let's get hysterical about the ups and downs of the price of a gallon of gas instead! We can't be suggesting that leftists have greedy impulses, too!
#6 Posted by Mark Richard, CJR on Sat 15 Oct 2011 at 07:20 PM
Mark raises a good point...
For every Argossy, there's a U.D.C. - a public school that plays the student loan/grant game to the hilt and has a graduation rate of less than 10 percent.
Why aren't these public schools held to an even higher standard than the private schools.
#7 Posted by padikiller, CJR on Sat 15 Oct 2011 at 09:03 PM
Actually it’s only a good point if you’re asking for the reform of both instead of pretending a U.D.C. excuses the graft of the for-profit student loan industry.
An unsupported knee jerk "guess" about the motives of public universities is just worthless hand waving.
#8 Posted by Jessup, CJR on Mon 17 Oct 2011 at 10:19 AM
The quoted recruiter had a master's degree in clinical psychology. Yet she was working as a phone solicitor, essentially a paid fraudster, even while millions with debilitating mental illnesses go untreated.
And this person was selling people on the value of higher education.
What a system.
#9 Posted by Edward Ericson Jr., CJR on Mon 17 Oct 2011 at 02:10 PM
"Don't the latter sometimes encourage kids to think a degree in Women's Studies, financed by student loans (which colleges happily use to jack up tuition and textbook costs) has economic value? "
I don't thing they do, or at least not often. The common student should be able to discern whether or not 4 years of womyn's studies is going to hold equivalent economic value to 4 years of nursing. The career expectations of those repective fields are different.
But when you have institutions offering 4 year nursing programs and the more expensive one turns out to be worthless because the crook institution doesn't invest in its programs and fails to deliver on its promised training, that is fraud. You expect to leave an institution with employable skills upon graduation. If the institution does not provide a program living up to that promise, then the very least of what should happen is bad press and civil prosecution for consumer fraud.
#10 Posted by Thimbles, CJR on Mon 17 Oct 2011 at 10:07 PM
I suspect those children down at Occupy Wall Street are complaining about student loans taken out to pay for 'non-profit' colleges and universities, not 'for-profits'. Rep. Markey will not investigate the mainstream universities.
To Jessup, as a consumer, I make no moral distinction between an institution that seeks to make a profit directly from me, vs. one that seeks higher 'funding' in the form of higher tuition, etc., and indirectly in the form of higher taxes. Does it really matter to a put-upon parent with a child in college which is which? The outcome, for the consumer, is the same. I would go further and argue that the consumer gets better value-for-dollar from 'profit-making' enterprises than from ostensibly 'non-profit' ones in the deliverance of services - starting with the field of education.
#11 Posted by Mark Richard, CJR on Tue 18 Oct 2011 at 12:25 PM
...I would go further and argue that the consumer gets better value-for-dollar from 'profit-making' enterprises than from ostensibly 'non-profit' ones in the deliverance of services - starting with the field of education.
You could argue that, you just wouldn't be able to back it up.
You've got Corintian admitting to dropout rates over 90%. Meanwhile Apollo, and ITT admit to drop out rates of around 50% - putting them on par with the least selective of university dropout rates.
Oh- and their degrees carry zero credibility in the professional field. Try and pull down extra cash at a job with paper from the University of Phoenix. Good luck.
If you can establish that the median graduation rates and subsequent salaries are higher at for profit institutions, please do so.
#12 Posted by Jessup, CJR on Tue 18 Oct 2011 at 02:04 PM
" I would go further and argue that the consumer gets better value-for-dollar from 'profit-making' enterprises than from ostensibly 'non-profit' ones in the deliverance of services - starting with the field of education."
And you would be wrong, as this story and many others indicate. For-profit schools are driven to exploit their students, that is the nature of "ROI, shareholder primary interest" capitalism.
And I want to make clear there's a difference between for-profit schools and private schools - for-profits care about profits to the exclusion of other interests, private institutions such as harvard care about their reputation. The only way to stop the exploit the suckers profit model is to make it unprofitable. And the only way to do that is to make sure their actions have a reputational cost.
#13 Posted by Thimbles, CJR on Tue 18 Oct 2011 at 02:20 PM
If you look at the money graduates are making, the for-profit schools fare pretty well - better than I thought would, at least according to payscale.com.
You have to go through 21 public and private non-profit schools whose graduates earn less than the lowest paying for-profit school listed.
It looks like most of the for-profit schools compare favorably to second-tier public colleges in terms of the earnings of their graduates.
http://www.payscale.com/best-colleges/top-us-colleges-graduate-salary-statistics.asp
#14 Posted by padikiller, CJR on Tue 18 Oct 2011 at 07:36 PM
Private, not for-profit. Different class.
"In August 2010, the Government Accountability Office reported on an investigation randomly sampled student-recruiting practices of several for-profit institutions. Investigators who posed as prospective students documented deceptive recruiting practices, including misleading information about costs and potential future earnings. They also reported that some recruiters had urged them to provide false information on applications for financial aid...
It was found that 14 out of 15 times, the tuition at a for-profit sample was more expensive than its public counterpart, and 11 out of 15 times, it was more expensive than the private counterpart. Examples of the disparity in full tuition per program include: $14,000 for a certificate at the for-profit institution, when the same diploma cost $500 at a public college; $38,000 for an Associate's at the for-profit institution, when the comparable program at the public college cost $5,000; $61,000 for a Bachelor's at the for-profit institution, compared to $36,000 for the same degree at the public college...
Students at for-profit institutions represent only 9% of all college students, but receive roughly 25% of all Federal Pell Grants and loans, and are responsible for 44% of all student loan defaults...
Some of the universities that are top recipients of Pell Grants have low graduation rates, leaving students degreeless, and graduating alumni may find it excessively difficult to find work with their degrees, leading some former students to accuse recruiters of being "duplicitous", and bringing into serious question the effectiveness of awarding Pell Grants and other Title IV funds to for-profit colleges."
On your link, you have to scan down to the School of Visual Arts (SVA), NYC, which was behind over a hundred institutions (I got bored counting) in the highest salary ranking and Ashford University for-profit was second from the bottom.
Reality bell, ding ding..
#15 Posted by Thimbles, CJR on Wed 19 Oct 2011 at 12:09 PM
To Thimbles and Jessup, I'll take that bait. How about an investigation of all colleges - for-profit or otherwise - that have high dropout rates and students with limited-value degrees + thousands of dollars in student loans? My main point, which you resist addressing, is that there is no moral distinction between 'for profit' schools and 'non-profit' schools that produce bad outcomes, so the 'investigations' by Markey and others can be dismissed as the usual chattering-class establishment attempts to divert attention from its own greed and failings.
The scandal of bad loans/student debt from government-backed loans threatens to become the new version of the bad loans/mortgage debt mess that produced the present slump. Sallie Mae bids fair to repeat the mistakes of siblings Fannie and Freddie - a quasi-public institution under political pressure to spread that Monopoly money around and buy votes. If past experience of our lazy, politically biased lamestream media is any guide, the 'blame' will be put on the banks, while the real culprits - greedy government, greedy higher education - will escape the wrath. 'Cause their 'non-profit', see. They can't possibly be greedy in the eyes of CJR and some of its posters - they have . . . good intentions . . . see . . .
#16 Posted by Mark Richard, CJR on Wed 19 Oct 2011 at 12:49 PM
Excuse me, "they're" rather than "their" in the second-from-last sentence above.
#17 Posted by Mark Richard, CJR on Wed 19 Oct 2011 at 12:52 PM
Thimbles wrote: On your link, you have to scan down to the School of Visual Arts (SVA), NYC, which was behind over a hundred institutions (I got bored counting) in the highest salary ranking and Ashford University for-profit was second from the bottom.
padikiller acknowledges the tolling of the Reality Bell: You're right on both counts - I missed Ashford University near the bottom of the list and I don't think anybody is seriously claiming that for-profit colleges are mixing it up with Harvard or Princeton or any other of the top 100 schools in the country.
However, my point stands. If you look at what graduates earn, it appears that the for-profit schools (on average) fare about as well second-tier public schools. This is a better performance than I would have expected.
#18 Posted by padikiller, CJR on Wed 19 Oct 2011 at 03:42 PM
"Anyone who has seen "Catch Me If You Can" or "Goodfellas" knows that this statement isn't true. There are plenty of felons on the FBI payroll."
Thank you thank you Padikiller for inserting a 'reality check' into this discussion, by citing Hollywood movies to back up your argument about what goes on in the real world -- and by conflating paid snitches (and a single extraordinary criminal mastermind turned law-enforcement consultant) with regular folks trying to study criminal justice and try to get hired by the FBI.
I mean, sure, the FBI's own web site says you cannot qualify as an FBI agent if you've been convicted of a felony. But as Padikiller has taught us, government is evil, so you can't believe anything it says. . . .
EMPLOYMENT DISQUALIFIERS
There are specific elements that will automatically disqualify job candidates for employment with the FBI. The FBI Employment Disqualifiers are:
* Conviction of a felony
* Use of illegal drugs in violation of the FBI Employment Drug Policy (see the FBI Employment Drug Policy for more details)
* Default of a student loan (insured by the U.S. Government)
* Failure of an FBI-administered urinalysis drug test
* Failure to register with the Selective Service System (for males only)
Please note that if you are disqualified by any of the above tests, you are not eligible for employment with the FBI. All of these disqualifiers are extensively researched during the FBI Background Investigation Process. Please make sure you can meet FBI employment requirements and pass all disqualifiers before you apply for an FBI position.
#19 Posted by goodfellow, CJR on Wed 19 Oct 2011 at 05:51 PM
Mark, when it comes to Sallie Mae you don't know what you're talking about.
And isn't it weird that while discussing an industry which over charges for a sub-standard product that it regularily lies about and exploits a victim's access to government backed credit to make its buck, isn't it weird that some of us are choosing to discuss this industry as if it's the victim?
I think if it was a government institution overcharging and defrauding people using taxpayer dollars and the most punitive type of debt on the books, these people wouldn't be speaking of how decent their product was all things considered or how we're just ignoring the promises private universities make to their students of European trans-gender literature.
Sometimes frauds are frauds and crime is crime. I mean how can anyone who has repeatedly brought up Solyndra as an undesirable boondoggle stand by universities who are guilty of worse rackets and their one virtue is that they are being more successful at it?
Weird.
#20 Posted by Thimbles, CJR on Wed 19 Oct 2011 at 06:51 PM
Here's a situation which good ol' socialist Bernie Sanders alone lately has been talking about. Far from government being an anti business, communist enterprise, the government is staffed by the institutions they bail out - in this case the banks which are still on government life support.
PS. Thanks for the civil acknowledgement of the Reality Bell's tone, padi. We don't have to bust each other's balls every time if you like. When given respect, I reciprocate. Cheers.
#21 Posted by Thimbles, CJR on Wed 19 Oct 2011 at 08:16 PM
@goodfellow: I deal with snitches on the FBI's payroll on a nearly daily basis, many of whom who are convicted felons or who have struck deals to avoid felony convictions through cooperation. The feds couldn't enforce criminal, copyright, environmental or patent laws without these snitches. PERIOD,
This is just the R E A L I T Y.
Same thing with state snitches,
#22 Posted by padikiller, CJR on Wed 19 Oct 2011 at 09:43 PM
The difference being that the snitches have something of value to bring to the FBI based on their individual experience, skill, or knowledge.
The people pursuing criminal justice degrees are doing so in the hope their degrees will provide them with employable value to the Justice system when, in actuality, their criminal record disqualifies them from using it as so. Without some proprietary knowledge of criminal activity for the justice system to utilize, these people have no chance of joining the system. And if they did have that proprietary knowledge, then the FBI wouldn't require an overpriced, sub par, criminal justice degree to use them.
The argument is a fail.
#23 Posted by Thimbles, CJR on Wed 19 Oct 2011 at 11:21 PM
Thimbles, we'll see whether Sallie Mae repeats the outcomes of Fannie Mae and Freddie Mac. Jane Hamsher's record as a prophet is not established. I think there is a bubble there, and ironically enough I think it is the 'Occupy' crowd that is the portent of it - student debt has reached crusing proportions, even though interest rates are below-market. Artificially, of course.
Elsewhere, since you are an intelligent person, I expect that some day the light-bulb will pop, and you and other co-religionists on the Left will realize that the regulatory boards and the industries they regulate are in bed together by necessity. It's inevitable. They are locked into a sybiotic relationship. You can't efficiently regulate an industry unless you know a lot about it, and the people who know the most about making cars, financing college education, how the Internet works, etc., are people working in the industry itself, since the economic world is not static. A green young lawyer or Harvard prof is not likely to know how to write regulations that a smart industry lawyer can't get around, or which will not be superseded by technological change, so who gets called in to help write the laws and regs? The big fish in the industry in question, of course. I'll leave it to you to guess which companies are 'advantaged' by regulations. So 'regulations' become just another hidden tax for consumers, adding to the cost of the product. Sarbanes-Oxley was supposed to introduce reform into the financial industry, right? That was 2002. A lot of large talk about 'reform' at that time. How'd that work out? Did it prevent the 2008-2009 problems? So we need . . . wait for it . . . Dodd-Frank and other regs. Leaving aside the ironic probability (overlooked by irony-impaired lamestream media types) that Barney Frank is as responsible as any single human being for the housing bust and subsequent recession, do you really want to bet that Dodd-Frank is going to make a positive difference?
Apparently you don't read carefully - I'm not defending for-profits. I'm saying that any real consumer advocate, instead of a shill for the university establishment, would not narrowly focus on for-profits. You and other keep dodging, and the reason I suspect is ideological - it is more acceptable for established 'non-profits' to rip off consumers than for frankly for-profit institutions to do so. You haven't given any other reason.
#24 Posted by Mark Richard, CJR on Thu 20 Oct 2011 at 01:24 PM
Speaking of the "bubble", it was reported on the radio this morning that outstanding student loan debt has reached a TRILLION DOLLARS and taxpayers are on the hook for most of it.
This is more than the entire GDP of Australia. Student loan debt has now surpassed credit card debt.
When this bubble pops, it's going to be ugly.
Putting the federal government into the education business has produced an expensive and crappy education system and a related inefficient and fraud-ridden financing system. Whoda thunkit?
#25 Posted by padikiller, CJR on Thu 20 Oct 2011 at 05:34 PM
"Elsewhere, since you are an intelligent person, I expect that some day the light-bulb will pop, and you and other co-religionists on the Left will realize that the regulatory boards and the industries they regulate are in bed together by necessity. It's inevitable. They are locked into a sybiotic relationship."
I expect better of my police than to work hand in hand with crime lords, and I expect better of my regulators than to walk hand in hand with sleaze bags taking advantage of the public at large.
Those regulators exist. The problem isn't with the regulators, it's with the politicians who shape the system by appointing corrupt industry people, often lobbyists, to positions of responsibility. Why? Because that is where the money is for one party, that's what the "markets can run themselves" ideology dictates for the other.
Not everyone is a sociopath who turns a blind eye to the destruction these companies wreak.
"So 'regulations' become just another hidden tax for consumers, adding to the cost of the product. Sarbanes-Oxley was supposed to introduce reform into the financial industry, right? That was 2002. A lot of large talk about 'reform' at that time. How'd that work out? "
How did that work out? The Bush Administration responded to banker whining and put Christopher Cox in charge of the SEC with predictable results. Now let me ask you a question. In 2000, the Commodity Futures Trading Act removed regulatory oversight of over-the-counter derivatives. How did that work out?
#26 Posted by Thimbles, CJR on Fri 21 Oct 2011 at 02:15 PM
Thimbles wrote: "I expect better of my police than to work hand in hand with crime lords, and I expect better of my regulators than to walk hand in hand with sleaze bags taking advantage of the public at large."
padikiller responds: This reply demonstrates a fundamental lack of understanding of the very nature of regulation.
Police exist to oppose crime lords. Regulators exist to foster regulated industries.
From the FDA's mission statement: "FDA is also responsible for advancing the public health by helping to speed innovations that make medicines more effective, safer, and more affordable and by helping the public get the accurate, science-based information they need to use medicines and foods to maintain and improve their health."
From the SEC's mission statement: "The mission of the U.S. Securities and Exchange Commission is to protect investors, maintain fair, orderly, and efficient markets, and facilitate capital formation"
From the EPA's mission statement: "Environmental protection is an integral consideration in U.S. policies concerning natural resources, human health, economic growth, energy, transportation, agriculture, industry, and international trade, and these factors are similarly considered in establishing environmental policy".
Cops and regulators. Apples and oranges.
#27 Posted by padikiller, CJR on Fri 21 Oct 2011 at 03:30 PM
Police exist to stop people who run through traffic lights. Police exist to put disruptive drunks away where they won't cause harm for the night. Police exist to check out reports of suspicious activity by the local bank. Ideally, they facilitate public order and societal adherence to law. Ideally, they regulate the streets where we live.
And when they don't facilitate public order and when they do operate on behalf of the criminals they should be regulating, we don't suggest that the law be done away with or that the society functions better without police enforcement, we design better laws and get better cops.
When it comes to industry both parties, the republicans moreso than democrats, remove laws and keep corrupt individuals running the enforcment system. This is unacceptable. The answer isn't anarchy, the freedom from laws and regulators which you free marketeers push for, but a restart. We need to elect people who respect laws over donations and competence over connections. We need people like Elizabeth Warren, not GW Bush or Barack Obama.
#28 Posted by Thimbles, CJR on Fri 21 Oct 2011 at 06:19 PM
The recession would have happened if media-darling Brooksley Born had never gone to Washington. It wasn't commodity futures trading that caused the recession. It was the housing bust. The housing bust was in turn caused by irresponsible lending by Fannie Mae and Freddie Mac, egged on by politicians. Wall Street is always 'greedy'. So is everyone else, but Wall Street is in the trading business. Crises usually occur when distortions are introduced into the system, and these distortions (perverse market incentives, most often) can almost always be traced back to politics and the public sector.
And if I were Scott Brown, I'd ask Elizabeth Warren how she explains the mess in Europe,which until recently has been invoked as a model for the US, and what she would do differently than the socialist politicians who made such a hash of the economies of Greece, Spain, etc.
As long as the chattering classes are looking for prophets, they could man up and compare statements about the housing bubble from 2002 or so from Paul Krugman, who said a housing bubble would be good for the economy at that time, and libertarian Ron Paul. Is Paul treated as a prophet in the wilderness for predicting the current slump, as well as the foreign policy messes of the decade? Why, to even ask the question is to display utter ignorance of the lamestream media and where they look for heroes.
#29 Posted by Mark Richard, CJR on Sun 23 Oct 2011 at 08:52 AM