August 9, 2007

Nebraska Attorney General Defends Nelnet and Assails Cuomo Investigation

Nebraska’s attorney general, Jon Bruning, attacked his counterpart in New York on Tuesday over his investigation of Nelnet, a student-loan company based in Lincoln, Neb.

In an interview with the Omaha World-Herald, Mr. Bruning called the New York attorney general Andrew M. Cuomo’s investigation of Nelnet and other student-loan companies “ridiculous” and “political.” Mr. Cuomo expanded his investigation last week to include alleged improper ties between lenders and 40 athletics departments.

Mr. Bruning has himself come under fire in connection with Nelnet. Higher Ed Watch, a blog run by the New America Foundation, has reported that Mr. Bruning’s outspoken defense of the company comes on the heels of a $9,200 donation by Nelnet’s chief executive officer, Mike Dunlap, to Mr. Bruning’s campaign for the U.S. Senate. (Mr. Bruning received an additional $6,900 from other executives at Nelnet and from the Union Bank & Trust Company, which Mr. Dunlap’s family owns.)

Last month, on the same day Nelnet agreed to pay $2-million and sign a code of conduct to settle the New York investigation, Mr. Bruning relieved the company of its obligation to pay $1-million to Nebraska as part of a separate settlement with the state.

In his interview with the World-Herald, Mr. Bruning called himself “a friend of Nelnet” and said he would “never apologize” for his relationship with it. “Nelnet is an ethical, decent, honest company,” he told the newspaper. “Unless you want to publicly fund campaigns, you are going to have individuals contributing to candidates.”

Michael Dannenberg, director of education policy at the New America Foundation, said in an interview on Wednesday that he was surprised anyone would say Nelnet had done nothing wrong because Margaret Spellings, the education secretary, has agreed that Nelnet’s manipulation of the subsidy floor on 9.5-percent loans was illegal.

“To say this is a company with clean hands is belied by the facts,” he said. —Elizabeth Quill

Comments

1. A person with a modicum of common sense would clearly think that Bruning is a bought man. But the corrupt loan system has become so standard and acceptable that even the attorney general of Nebraska thinks that Nelnet’s practices are “honorable.” Besides, they’re his friends who give him money.

   When the day-to-day practices of business control our institutions, education and the law, immoral becomes moral. Clearly, these institutions are in peril. And if that weren’t worrisome enough, Mr. Bruning is asking voters to let him take his warped values to the national legislative body, our U.S. Senate.

   — Herbert Morgan    Aug 9, 11:08 AM    #

2. FOR WHOM THE BELL TOLLS — — THE BELL TOLLS FOR THEE — Many Financial Services professionals side with the AG from Nebraska. It appears likely that a connection between the fundraising arm of AG Cuomo’s 06’ campaign and his staff’s apparent “brush-by” .. “didn’t notice” — “hand’s-off” approach to – NY’s own – MY RICH UNCLE — MRU — may be intentional. How is it that MRU continues to boldly market itself as transparent while others, including Sallie Mae, Chase, NELNET, Citi-Corp, Major National Universities — both in and out of NY, continue to be bombarded by subpoenas and other legal maneuvers by the NY-AG’S over-zealous — staff of legal-watch-dogs, yet no mention to date has been made about MRU’s phenomenal growth in the Private Student Loan Sector? The IHE article/interview with AG Cuomo left the impression that snowballs in March — rolled properly at the correct angle — create an avalanche. NYC’s recent … once-in-a-100 yr tornado — on 8/8 — may have created a similar chilling effect for the AG from Albany and his staff by the AG’s of South Carolina and now – Nebraska. Others AG’s may follow suit as their staffs investigate the real motivation for AG Cuomo’s legal staff’s groundpounding, attendance at NACUBO’s Natonal Meeting, etc. Stay tuned folks – it may get bumpy before Labor Day and the start of the Fall Term !

   — RASTAS    Aug 9, 01:08 PM    #

3. Michael Dannenberg says what Nelnet did was illegal because Margaret Spellings said it was illegal.

   Isn’t she the same Secretary of Education that Dannenberg, NAF and half the free world have criticized for being incompetent (their views, not mine)?

   — Alex Hamilton    Aug 10, 09:26 AM    #

4. Honesty is the best policy.

   William Allan Kritsonis, PhD
   Editor-in-Chief
   NATIONAL FORUM JOURNALS
   (Since 1983)

   — William Allan Kritsonis, PhD    Aug 10, 11:22 AM    #

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