Bush Cabinet Member Incompetent, Film at Eleven

It might be easier for us to count the cabinet members who aren’t idiotic, corrupt or just plain evil. Chertoff, Gonzales, Condi, and Gates certainly don’t qualify. Hell, the Health and Human Services Secretary was appointed specifically to not enforce the EPA. So now that we’ve officially established that Secretary of Education Margaret Spellings is also totally inept, the pickings are getting a little slim. By my count, that only leaves us with Transportation Secretary Mary Peters. Though I could have missed a news cycle or two.

You all may know the fine Ms. Spellings from her implementation of the gigantic clusterfuck that is the No Child Left Behind program. What you probably didn’t know is that she’s in the pocket of the student loan companies as well. Lovely.
The [D]epartment [of Education] has also come under scrutiny from Congress for its failure to halt millions of dollars in subsidy payments to lenders that exploited loopholes to inflate their eligibility for subsidies on the student loans, including those paid to Nelnet.

[Rep. George] Miller [D-CA] and other lawmakers pressed Ms. Spellings, the lone witness, to explain her decision in January to allow Nelnet, a major contributor to Republican campaigns, to keep the $278 million. In exchange, Nelnet agreed not to bill for nearly $900 million in subsidies it believed it was eligible for.

Ms. Spellings said that she thought the fact that the department had been paying the subsidies without question could have put it in legal jeopardy and that Nelnet might have prevailed in a lawsuit.

“The reason that I settled was that there was a risk of nearly $900 million that this government was in danger of losing if we lost a lawsuit,” Ms. Spellings said.

Representative John F. Tierney, Democrat of Massachusetts, said, “It boggles my mind — we allowed somebody to get away essentially with theft.”
Margie was in front of the House of Representatives education committee yesterday to defend herself from accusations of incompetence and corruption stemming from the student loan scandals that are currently mushrooming into a larger and larger problem for the industry and the DOE. You may remember the one about schools paying loan companies to act as their financial aid offices. In addition, there have also been several accusations from a variety of state authorities that financial aid officers in many schools were being bribed to recommend certain lenders. Now comes the charge above that Spellings allowed Nelnet to fleece the government out of $278 million that they were not entitled to.

Of course, as is typical for this administration, none of these problems were her responsibility.
Ms. Spellings faced pointed questioning at the hearing from Congressional Democrats, who accused her department of mismanagement and complacency.

In about three hours of testimony before the House education committee, Ms. Spellings portrayed her department’s oversight of federal lending programs as vigorous, but said that the world of private lending, which has become increasingly important as college costs have outstripped federal loan programs, was mostly beyond her regulatory authority.

She told the panel that the entire student loan system needed overhaul, saying, “The system is redundant, it’s byzantine and it’s broken.”

Several Democrats, led by Representative George Miller, questioned her aggressively, asserting that she had regulatory power and moral influence that she had neglected to wield to stop loan companies from paying universities or giving gifts, trips, stock and consulting payments to the university financial aid officers who guide students toward loans.
The problem with the whole “oh I’m powerless to stop all these bad people!” shtick is that it’s a load of shit.
When Jon Oberg, a Department of Education researcher, warned in 2003 that student lending companies were improperly collecting hundreds of millions in federal subsidies and suggested how to correct the problem, his supervisor told him to work on something else.

The department “does not have an intramural program of research on postsecondary education finance,” the supervisor, Grover Whitehurst, a political appointee, wrote in a November 2003 e-mail message to Mr. Oberg, a civil servant who was soon to retire. “In the 18 months you have remaining, I will expect your time and talents to be directed primarily to our business of conceptualizing, competing and monitoring research grants.”

For three more years, the vast overpayments continued. Education Secretary Rod Paige and his successor, Margaret Spellings, argued repeatedly that under existing law they were powerless to stop the payments and that it was Congress that needed to act. Then this past January, the department largely shut off the subsidies by sending a simple letter to lenders — the very measure Mr. Oberg had urged in 2003.
Mr. Oberg is a retired civil servant. In 2003, he saw lenders take advantage of the same loophole in the federal lending system that Nelnet exploited to the tune of millions of dollars a year. When he made noise about this practice and the extreme amount of government waste it generated, he was told by his superiors to piss off. In fact, his job description was even changed to prevent him from dealing with the problem in any way. Now that student loan scandals are hitting the front pages everywhere, the DOE is trying to cover their tracks by actually doing their fucking jobs. How novel.

Make no mistake, however. This isn’t just a case of simple bureaucratic inefficiency.
A 2004 report by the Government Accountability Office urged the department to rewrite its regulations to save billions of dollars in future loan subsidy payments. But Ms. Stroup, who had once worked for one of the lending companies that is now under investigation for the subsidies, argued in response that it would be simpler for Congress to clamp down with new legislation. Mr. Paige repeated that argument in a letter to Mr. Kennedy, who was pressing the department to curb the subsidies.

Then, in 2005, the Education Department’s inspector general recommended that $36 million be recovered from a New Mexico lender. Ms. Spellings overruled the finding that the payments were improper and declined to recover the payments. And in January 2007, after the inspector general recommended that $278 million in overpayments be recovered from Nelnet, the department instead reached a settlement under which Nelnet could keep the money — if it dropped plans to bill the department for another $800 million in subsidies.

Nelnet was the nation’s most generous corporate donor to the National Republican Congressional Committee in 2006, and its top three executives were the largest individual donors to the committee as well, according to the nonprofit Center for Responsive Politics.

Nelnet was also well connected at the department. Don Bouc, Nelnet’s president through 2004 and president emeritus thereafter, sat on the department’s Advisory Committee on Student Financial Assistance from 2001 through Feb. 1 of this year, even while the department was auditing the company’s subsidies and negotiating the settlement. Mr. Bouc resigned from the committee 11 days after the department announced that it would not seek to recover the $278 million.
I’ve really just about run out of snarky things to say about the unabashed malevolence of this administration. The culture of corruption it promotes seems to the tips of its very fingers, into places where one wouldn’t normally expect it to go. Again, none of this is surprising anymore. Just another tally on the Big Board O’ Bushie Badness.

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