Daily Archives: November 17, 2015

85,000 Corinthian Students Can Now Get Their Loans Forgiven

Tens of thousands of borrowers just won the right to get relief on their student loans, following the conclusion of an investigation into defunct for-profit colleges. On Tuesday, California Attorney General Kamala Harris and the U.S. Department of Education announced the end of a probe into Corinthian Colleges, a company that once owned more than 100 for-profit colleges and filed for bankruptcy in May.

“Corinthian preyed on vulnerable students who are now buried under mountains of student debt,” said Attorney General Harris in an e-mailed statement. On a call with reporters Tuesday, she said: “These students held up their end of the bargain. They worked hard, they paid for school and took on debt, making sacrifices, believing they were doing the right thing. I think the least we can do now is give them the relief they deserve.”

The investigation found that the company had lied to students for years about their chances of getting a job after graduating from two of its chains, Wyotech and Everest University. Now 85,000 students who went to the schools in California, or took courses in Everest’s online program, will be allowed to apply for loan forgiveness through the Education Department.

Read on.

Nominee to Oversee Wall Street Works at Think Tank Dedicated to Blocking Regulation

President Barack Obama recently nominated Hester Maria Peirce to fill a Republican seat on the Securities and Exchange Commission.

His announcement included her formal title — senior research fellow and director of the Financial Markets Working Group at the Mercatus Center at George Mason University — which sounds a lot like an academic post.

But Peirce, new disclosures show, received 98 percent of her salary directly from the Mercatus Center, a “think tank” that provides an academic façade to a radical anti-regulatory agenda. The Center’s so-called research reflects the lobbying priorities of its corporate funders — chief among them, Koch Industries.

Asked about any potential conflicts of interest given her work for the Mercatus Center, Peirce told The Intercept, “I appreciate you reaching out but I cannot comment at this point.”

The Mercatus Center has been described by the Wall Street Journal “as a coordinating center for lobbyists trying to block a flurry of regulations.” Congressional records show the think tank routinely cited in over a dozen hearings over the last two years by lawmakers seeking to roll back regulations on business interests. 

Financial reporters say the nomination of Peirce to fill a Republican vacancy on the commission comes as no surprise, especially given the nominee’s close ties to congressional Republicans, who now control the U.S. Senate confirmation process. Peirce has appeared on Capitol Hill as an expert witness on financial reform issues, and is a former staff member to Sen. Richard Shelby, R-Ala., the chair of the Senate Banking Committee.

Read on.

Fired Citigroup Currency Trader Wins Lawsuit Over Rigging Probe

  • Perry Stimpson unfairly fired amid currency probe, judges say
  • Judges also say Stimpson contributed to his dismissal

Former Citigroup Inc. currency trader Perry Stimpson won his lawsuit against the bank over claims he was unfairly fired during an investigation into allegations of market rigging.

Citigroup breached his employment contract by failing to pay him notice, a panel of London employment tribunal judges said. They also said Stimpson’s conduct had contributed to his firing in 2014, without giving further details.

Stimpson’s case was the first in a spate of wrongful termination suits related to currency-exchange manipulation to be heard in London. Banks have fired dozens of traders in the aftermath of regulatory probes in which they have been fined at least $10 billion.

Read on.

House passes bill to cap Fannie, Freddie CEO pay

Next.. at the President’s desk to sign…

The U.S. House of Representatives officially passed legislation to cap the salaries of the Fannie Mae CEO Timothy Mayopoulos and Freddie Mac CEO Donald Layton on Monday night after being delayed two weeks by a busy Congressional calendar.

The House of Representatives was due to vote in late October on limiting the pay of the Fannie and Freddie CEOs, but that vote was delayed by a combined house budget vote, a vote on reopening the federal Export-Import Bank, and a vote on electing Rep. Paul Ryan, R-Wis., as the new Speaker of the House.

Read on.

For-profit college chain to pay nearly $100 million penalty for recruiting tactics

A drop in the bucket…

A major for-profit college chain will pay nearly $100 million to settle claims the company illegally incentivized recruiters to use high-pressure tactics to convince students to enroll in the school. As part of the deal, the company will also forgive more than $100 million in loans students borrowed from the company to attend the school.

Education Management Corp. (EDMC), the parent company of the Art Institutes, Brown Mackie College, Argosy University and South University, will pay $95.5 million to settle claims the company created a “high-pressure boiler room” environment where admissions staff were paid based on how many students they enrolled, the Justice Department announced Monday. The company then lied about the practice to the government in order to stay eligible for federal financial aid funding, officials allege.

“Simply put, EDMC wasn’t interested in playing by the rules,” Secretary of Education Arne Duncan said during a news conference announcing the deal. “We uncovered substantial evidence that EDMC illegally paid recruiters based upon how many students they enrolled. Instead of caring about whether a student would be successful in EDMC’s programs, the company seemed to only care about revenue at a significant cost, both to students and taxpayers.”
EDMC Chief Executive Mark A. McEachen said in a statement that the company disputed the claims that it illegally used high-pressure tactics to enroll students. “Though we continue to believe the allegations in the cases were without merit, putting these matters behind us returns our focus to educating students,” he said.

Read on.

House Bill Would Make It Harder To Prosecute White-Collar Crime

CEOs could be off the hook for even gross negligence.

WASHINGTON — House Republicans on Monday unveiled legislation that would decriminalize a broad swath of corporate malfeasance, a move that injects white-collar crime issues into the thus-far bipartisan agenda on criminal justice reform.

The public debate over criminal justice reform has focused on reducing severe sentences for nonviolent drug offenses. But some influential conservative voices, including the billionaire Koch brothers and the Heritage Foundation, have quietly advocated for curbing prosecution of corporate offenses as well.

The House bill would eliminate a host of white-collar crimes where the damaging acts are merely reckless, negligent or grossly negligent. If enacted, it would make it more difficult for federal authorities to pursue executive wrongdoing, from financial fraud to environmental pollution.

Department of Justice spokesman Peter Carr blasted the legislation in a statement provided to HuffPost, saying it “would create confusion and needless litigation, and significantly weaken, often unintentionally, countless federal statutes,” including “those that play an important role in protecting the public welfare … protecting consumers from unsafe food and medicine.”

The House Judiciary Committee will begin marking up its criminal justice reform package, including the latest bill, on Wednesday. Chairman Bob Goodlatte (R-Va.) and Rep. John Conyers (D-Mich.), the panel’s top-ranking Democrat, have been working on bipartisan legislation for months.

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Hillary Clinton’s Allegiance to Wall Street in Under 90 Seconds

From Bill Moyer’s 2004 interview with Elizabeth Warren: