In June, Tom Harkin (D., Iowa) held a Senate hearing to show how bad for-profit colleges are. With all the strengths at the Senate’s disposal, from legislative research capabilities to subpoena power, for help he turned to . . . the for-profit sector!
Specifically, he turned to Wall Street short-sellers. ProPublica, a nonprofit investigative-journalism organization, recently revealed that an investment firm had orchestrated and written a letter that was signed by staff members of homeless shelters. The letter claimed that for-profit schools had recruited homeless people as students. But some of the signees told ProPublica that they had only secondhand information about such recruitment, and they had not known that an investment firm was behind it.
One of the most prominent witnesses at the June hearings was Steven Eisman, a short-seller. He said that Johnette Early (who put together the homeless-shelter letter) did not work for him. However, he did say at the hearing that he has a financial stake in the success or failure of for-profits (presumably by trading on their futures). In May, Eisman sent the prices of for-profit schools’ stock scuttling after he told a group of investors that the colleges are “socially destructive and morally bankrupt.”
If the government needs a job to be done, it’s efficient to get the private sector to do it.