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Private Equity Owned Subprime Schools Try To Preempt New Rules With Promise To Self-Regulate

As we’ve been documenting, the for-profit school industry has been waging a lobbying war in Washington, in an effort to block new Education Department regulations. These regulations (known as “gainful employment” regulations) would cut higher education programs off from federal dollars if too many of their students can’t find jobs and default on their student loans.

Today, an organization called the Coalition for Educational Success (CES) — which vigorously opposes the gainful employment regulations — announced its intention to “develop standards” for the industry, with the promise that these standards “will improve and ensure transparency, disclosure, training, [and] provide strong new protections for students.” “These Standards will serve as a model for all institutions of higher education,” CES said.

CES has called the proposed gainful employment rules “a job killer and a prime example of regulatory over-reach,” and these supposed standards are a pretty clear attempt to preempt the Education Department by arguing that the schools are already taking steps to clean up their own act. But who exactly is the CES? Why does it fear gainful employment rules so much?

CES is led by the Education Management Corporation, a company owned, in part, by Goldman Sachs Capital Partners. The other owners of Education Management Corp are a pair of private equity firms: Providence Equity Partners and Leeds Equity Partners.

Many of these subprime schools make more than 90 percent of their revenue from the federal government and have profit margins of as high as 30 percent. But their students account for a disproportionate amount of student loan defaults and many schools have been caught using misleading statistics and outright intimidation to recruit students.

According to its latest filings with the Securities and Exchange Commission, Education Management Corp. makes about 89.3 percent of its revenue from the government. But earlier this month, Goldman Sachs analysts downgraded Education Management Corp to “sell” because it “will be most exposed to gainful employment regulations, due to its end-market exposure coupled with low repayment rates.”

According to this analysis, if the company loses its access to federal dollars, it’s going to go into the tank. Blocking gainful employment rules from coming online would mean that the company could continue to count on the federal government to insulate it from losses (as student loan defaults cost the government, not the company itself, money).

If we learned anything from the financial crisis, it’s that allowing industries to self-regulate, particularly when they deal with financial products, leads to disastrous outcomes. Allowing for-profit schools to self-regulate would likely not end much better.

Campus Progress has more on CES’ lobbying activities. According to the Center for Responsive Politics, CES has already spent half a million dollars on lobbying this year, after spending $570,000 last year.

After 40 Years Of Success Protecting Workers, Republicans Want To Gut And Handicap OSHA

This month marks the 40th anniversary of the creation of the Occupational Safety and Health Administration, the federal agency tasked with policing workplace safety conditions. OSHA was created by the Occupational Safety and Health Act of 1970; the bill went into effect in April of 1971.

At the time, as OSHA director David Michaels noted in a speech today at the Center for American Progress, Republicans hailed OSHA as “the instrument of a revolutionary law,” and part of “a new right in the bill of rights”:

Passed with strong bipartisan support, President Nixon called the Occupational Safety and Health Act one of the most important pieces of legislation ever passed by the Congress of the United States. Dr. Morton Corn, appointed by President Ford as agency administrator, described OSHA as ‘the instrument of a revolutionary law…a new right in the bill of rights, the right to a safe and healthful workplace.’ It is hard to believe, before OSHA, workers in America did not have the basic human right to a safe workplace.

Watch it:

Here are Nixon’s full remarks, in which he said that “this bill could not be signed unless it had bipartisan support, Democrats and Republicans working together.” But today’s Republicans don’t reserve such kind words for OSHA.

In fact, Republicans earlier this year proposed huge cuts to OSHA’s budget that Michaels said would “have a devastating effect on all of our activities.” Republicans also blocked new regulations that would have allowed OSHA to crack down on businesses, like the Massey Energy owned Upper Big Branch Mine, that repeatedly violate workplace safety laws.

“Over the last two years, OSHA has not only attempted to implement several policy changes that would have profound impact on the workplace; it has become an administration more focused on punishment than prevention,” said Rep. Tim Walberg (R-MI). The continuing resolution approved earlier this month to avert a government shutdown cut OSHA’s funding by $49 million.

OSHA has, over the last few decades, helped to usher in a significant decline in workplace injuries. As Profs. David Rosner and Gerald Markowitz found, “in the past four decades, the number of deaths due to workplace accidents fell from 13,800 in 1970 to 5,657 in 2007. The total incidence rate of private sector occupational injuries and illnesses plummeted from 10.9 per 100 workers in 1972 to 3.9 in 2008.” Still, every day, an average of 14 Americans are killed on the job, while 3.3 million Americans are injured or sickened in the workplace each year. And if Republicans have their way, OSHA will have less resources to combat these still-too-high numbers.

Power Shift 2011: Join The Briefcase Brigades On April 27

Our guest blogger is Noland Chambliss, a member of the Briefcase Brigades.

Ten thousand young people descended on Washington for the Power Shift conference this weekend to call for bold action from government leaders to address climate change and create a clean energy economy for all. Many of these young people had a more specific, and personal, message for Congress: “I need a job.”

Inspired by passionate speeches addressing youth unemployment by AFL-CIO president Richard Trumka and green jobs visionary Van Jones, the members of the Briefcase Brigades are bringing attention to the epidemic of un- and under-employed millennials:

We are ready to work. We know the economy is in bad shape. We know the country is in trouble. We want to help. But first, we need jobs.

Watch the story of the Briefcase Brigades at Power Shift 2011:

On April 27th, while Congress is in recess and members are back in their districts, young people are creating Briefcase Brigades and going to their offices all around the country to demand Congress prioritize jobs over budget cuts.

According to the Bureau of Labor Statistics, there are over 5 million young people who are out of work. That doesn’t count people with unpaid internships, people with low-wage jobs that don’t have health insurance, and people who went back to school because they couldn’t find a job.

Chances are you know one of these young people. Someone living with their parents long after they decided they wanted to move out. Someone working their second or third unpaid internship. Someone working several part time jobs, with no health insurance, who still struggles to make ends meet.

What if instead, these young people were given an opportunity to address some of the problems we hear about on television everyday? What if they were given the opportunity to help develop and deploy renewable energy technology? What if they were put to work repairing our crumbling infrastructure? What if they were given a chance to help design and build new products to help us compete with the rest of the world?

Then those youth would be working, paying taxes, paying their own rent, buying things, opening bank accounts and making investments. They might even start their own businesses and create more new jobs. They would be helping to get the economy working again.

Many young people, such as the leaders of WeatherizeDC and Solar Mosaic who came to the Power Shift conference, are already taking steps to create jobs and build a strong green economy. But we should not be left to try and solve the jobs crisis alone. Our elected officials, our representatives, should be a partner to young people in this challenge.

It’s time for Congress to stop talking about cuts and start talking about jobs.

Join us on April 27th. Get dressed up for a job interview, bring your resumé and a briefcase, and a few of your friends too. Go to your local Congressperson’s office and ask them what their plan is to address youth unemployment. Tell them we are ready to work, and ask them “Where are the jobs?”

Sign up to join an event or host on of your own at www.BriefcaseBrigades.org and follow @april27brigades on Twitter.

VIDEO: Paul Ryan Opposes Placing Stronger Regulations On Too-Big-To-Fail Banks

The House Republican budget that was approved in the lower chamber last week without any Democratic votes includes a promise to “revisit” some aspects of the Dodd-Frank financial reform law. At the top of the list for the House GOP, as explained in their budget outline, are the new tools included in Dodd-Frank that allow the government to deal with banks that are too-big-to-fail.

The Dodd-Frank law directs the newly created Financial Stability Oversight Council — which is tasked with policing systemic risk in the financial system — to identify banks and non-banks as systemically risky, and therefore subject them to stronger regulation. This addresses a key problem that existed in the pre-2008 financial system: large non-banks like AIG were allowed to become systemically risky without any sort of regulation, while the largest banks were not subjected to strong enough regulations even as they grew to massive size.

But House Budget Committee Chairman Paul Ryan (R-WI) — who authored the GOP’s budget — doesn’t believe that too-big-to-fail banks should have to abide by more stringent regulations. ThinkProgress’ Scott Keyes stopped by a Ryan town hall in Elkhorn, WI, where Ryan explained that the government shouldn’t try to identify which banks are the biggest and riskiest:

Now, the big banks, they just got a new law that basically says, if you’re so big then you’re going to get a bailout. So we’re basically amplifying too-big-to-fail and by deeming these big banks as systemically risky, that gives them the ability to go out in the markets and get cheaper money than all the smaller community banks. I think you’re just going to end up with massive banks in this country. That’s not healthy.

Watch it:

As I’ve pointed out over and over again, the Dodd-Frank law does not perpetuate bailouts but gives the government a new process — known as resolution authority — that was not available in 2008, forcing the government to resort to ad hoc bailouts. Former Treasury Secretary Hank Paulson said that he “would have loved to have” the resolution authority in Dodd-Frank, so he could have dismantled risky, failing firms instead of bailing them out.

As for the GOP’s opposition to designating systemically risky firms, David Min explained that it amounts to ignoring the too-big-to-fail problem. Republicans would rather close their eyes and pretend too-big-to-fail doesn’t exist, rather than try to mitigate the chances that such a firms blows itself up. Other than more stringent regulations, the only other option is breaking up too-big-to-fail banks into smaller parts, an idea that Republicans roundly opposed during the financial reform debate.

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