For Immediate Release
Peter Bjork 202.408.5565
CREW Asks Senate Help Committee to Question Motives of Critics of For-Profit Education Industry
WASHINGTON - Today, Citizens for Responsibility and Ethics in Washington (CREW)
sent a letter to Sen. Tom Harkin (D-IA), Chairman of the Committee on
Health, Education, Labor and Pensions ("HELP"), asking the committee to
consider the financial motives of critics of the for-profit education
On July 9th, ProPublica reported
efforts by Johnette McConnell Early, employed by an unnamed
financial firm, to fuel anger over the for-profit educational industry
and to seek greater regulation of it. Without disclosing this, Ms.
Early solicited 19 executives from homeless shelters and service
agencies to sign a letter to Secretary of Education Arne Duncan
expressing concern that for-profit trade schools and career colleges
prey upon vulnerable individuals and pledging support for efforts to
strengthen regulations of that industry. Some of signatories later
admitted having no first-hand knowledge of the facts set out in the
letter. Ms. Early claimed not to know whether the firm employing her is
betting against the for-profit higher education industry. She did say,
however, "Clearly an investment firm is not going to look into something
unless they're thinking about whether it's a good or bad investment."
In addition, a non-profit group associated with another high-profile
investor, Manuel P. Asensio, has written five letters to members of
Congress and regulators since April criticizing the for-profit college
industry and calling for stricter regulation. At least one short-sales
analyst has noted the "increasing interest" of short sellers in
CREW Executive Director Melanie Sloan stated, "Critics allege the
for-profit education industry is not at all about education and is all
about profit. Now it turns out the criticism may be all about profit
too. How are Americans supposed to know what to believe?" CREW
suggested the committee ask Ms. Early to identify the financial firm
On July 1st, CREW sent a letter to Sen. Harkin criticizing the
committee's decision to allow Steven Eisman, a well-known short seller,
to testify before the committee given that Mr. Eisman has made money by
short-selling for-profit education companies' stock. On July 2nd, Sen.
Harkin responded, noting Mr. Eisman's prescience in accurately
predicting the subprime mortgage bubble and the parallels between that
industry and the for-profit education industry. He explained that Mr.
Eisman had an "important perspective to share" and that Mr. Eisman had
admitted to having a financial stake in the success or failure of
for-profit education companies.
Sloan stated, "The evidence suggests individuals who stand to gain
financially are making a concerted effort to drive down the stock price
of for-profit schools. They are trying to manipulate the federal
regulatory process for personal financial gain." She continued, "While
the for-profit education industry certainly merits congressional
scrutiny, Congress must also examine the tactics and motives of the
industry's critics. Americans need to have confidence that legislative
and regulatory processes are not being manipulated for private financial
here to read CREW's letter to the HELP Committee.
Citizens for Responsibility and Ethics in Washington (CREW) is a nonprofit 501(c)(3) organization dedicated to promoting ethics and accountability in government and public life by targeting government officials -- regardless of party affiliation -- who sacrifice the common good to special interests. CREW advances its mission using a combination of research, litigation and media outreach.