Loan Scandal Goes Federal

New York State may not have the greatest government in the world, but it’s again making Washington look bad, by exposing corruption there.

The former “Sheriff of Wall Street,” Governor Eliot Spitzer, handed off his college loan investigation to the new attorney general, Andrew Cuomo, and Cuomo is running fast and far with it.

Latest development: Like the heads of financial aid at some colleges, a high-ranking federal employee had a sweetheart stock deal with a lender that paid schools to steer students in its direction. The deal allowed them to buy the company’s stock for one dollar a share, and reap big profits when they cashed out.

college-loans.jpgA senior official at the federal Education Department sold more than $100,000 in shares in a student loan company even as he was helping oversee lenders in the federal student loan program.

The official, Matteo Fontana, now general manager in a unit of the office of Federal Student Aid, was identified yesterday from government documents as a stakeholder in the parent company of Student Loan Xpress who sold shares in 2003.

The New York Times

The Times also reports today that SUNY Chancellor John R. Ryan is on the board of CIT Group, which now owns Student Loan Express. The Chancellor says, like so many others being investigated by the attorney general’s office, that he’s done nothing wrong.

You might think this would be a matter the U.S. Attorney General would like to jump into, but he seems to have other things on his mind right now.

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One Response to Loan Scandal Goes Federal

  1. […] lenders,” will be reimbursed for the amount of the kickbacks. Here’s the latest of our previous posts on the story, and today’s New York Times story on that proposed no-kickbacks […]

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