Dirty Deals in the Department of Ed?

WASHINGTON – Sen. Chuck Grassley is asking the Department of Education secretary to provide details of any policies governing how department employees should handle contact with private investors seeking to profit from non-public agency information.  Grassley’s inquiry comes after revelations of contact between investors tracking federal regulations affecting for-profit colleges and high-level Department of Education employees.

“Certain investors contact government agencies to try to gain any advantage they can over other investors,” Grassley said.  “Since that’s inevitable, the question is how federal employees respond.  Do federal employees give out information that short sellers can use to make money?  Are the employees influenced in their rule-making by investors who don’t disclose their financial interests?  The Department of Education should account for how it handled investor contacts leading up to the regulations affecting for-profit colleges and going forward.  An accounting is necessary to establish confidence in the integrity of government management.”

Government watchdog groups have obtained documents through the Freedom of Information Act that show contacts between Department of Education employees and short sellers who make money by betting against certain stocks, including a known short seller who publicly criticized the for-profit education industry.  The Department of Education inspector general reportedly is conducting an investigation of the propriety of the department’s conduct.

In a letter today, Grassley asked the Department of Education secretary whether the department has any policies for employee contact with financial speculators looking for non-public information to profit in the securities markets.  The text of Grassley’s letter is available here.

Obama’s Department of Education has been jonesing to attack for-profit colleges from day one. Its Gainful Employment rule places unfair requirements on the for-profits that are not placed on public universities, and has drawn fire from Democrats as well as Republicans. Are Dept of Ed personnel now trying to hurt for-profits behind the scenes too?