Monday, May 7, 2007

Bush Administration Stopped Loan Reforms...Irregulation Again!

So we didn't have to have this student loan scandal after all according to the Washington Post. Back in 2001 the Bush Administration killed a proposal to clamp down on the student loan industry. Not particularly surprising since inasmuch as there is no money making endeavor that the Bush Administration can stomach regulating. They prefer irregulation. Mr. Bush entrusts regulation to veterans of the industries that would -- or should be -- regulated which results in irregulation. Think killer whales regulating seals, cheetahs regulating antelope, crocodiles regulating wildebeests, you get the picture. There is something extraordinarily pernicious about this practice so reminiscent of Reagan. It can be far worse than no regulation at all.

In keeping with this theme, the esteemed Theresa S. Shaw (pictured), is "Chief Operating Officer of the Office of Federal Aid." Wow, C00 sounds so like a private industry title wouldn't you think? Well a kind of pubic/private partnership! Not surprising that she spent 20 years at Sally Mae honing her talents until they became suitable to regulating the student loan industry for the DOE. Yep the same Ms. Mae that is the biggest student lender. She brought some of her ilk from Sally Mae and other student loan lenders according to the New York Times and the Herald Tribune Hey networking works so well for private industry, it should do well for public service also! And surely an intimate knowledge of what you're irregulating is helpful. Ms. Shaw and her band of irregulators are now being investigated for conflict of interest as part of the burgeoning student loan scandal. Well, that's ironic, because there are no conflicts of interest in irregulation. Everyone is on the same side!

Another one of DOE irregulators, Sara Martinez Tucker, the under secretary of education, brought the meaning of term irregulation into sharp focus when she decided that Nelnet, a student lender, could keep the $278 million dollars they overcharged the government according to a DOE Inspector General audit. Ms. Tucker, of course has some ties -- actually many ties, think bondage -- to the loan industry and even Nelnet as the New York Times illustrates. Irregulators need to be in touch with the industry they are iregulating. That's what makes them such good irregulators!

In fact, another irregulator, Sally Stroup, an assistant secretary of education, spent much of her formative years in for-profit education which is complete dependent on student loans. Ironically enough she received a memo in August 2003 from the DOE inspector general urging her to curb any "illegal inducements" to lenders. Well, the DOE inspector general obviously doesn't understand irregulation so Ms. Stroup paid the memo little mind. According to the College Journal:

"At least eight top officials in the Education Department during the Bush administration either came from student-loan or related organizations or have taken lucrative jobs in that arena since leaving the agency. Former Education Department staffers say a revolving door between the department and industry has led to lax oversight of federal financial aid."

I'm thinking you are starting to understand how and why irregulators are chosen!
Secretary of Education Spellings asserts its an asset having administrators who have
so much experience in the student loan and other related industries.

Well according to the Washington Post and New York Times, Ms. Shaw will be leaving her post at the rudder of the student loan department having done all the irregulation college students and the nation can stand for now. The following is what she said in an email per the aforementioned Washington Post article:

"The recent attention on our programs and our work only confirms how very important our programs are to the students and families we serve, I am confident that together we established a solid foundation for Federal Student Aid's continued success."

Now that's irregulation and it is indeed a success . . . for the loan industry. But that's the goal of irregulation, benefiting the industry that's being irregulated.