Student Loan Reform And Local Corruption – Wingin’ It Wednesday
This week on "Wingin' It Wednesday", panelist Carol Ross, Mike Stagg, and Warren Caudle joined "Mornings with Ken and Bernie" to discuss the the recent LPTFA audit as well as the Senate's attempt to reform student loans.
Here's what the panel had to say:
1. Your thoughts on the Louisiana Legislative Auditor’s review of the Lafayette Public Trust Financing Authority which was requested by three LCG councilmen?
Carol Ross started us off:
We've talked about this before and it's just a recipe for abuse. They keep saying it's private money, but it's not private money. This all started with the federal money flowing in due to high interest rates in the late 70s and early 80s and it built up from there. They get federal money through tax credits coming in the Louisianan Housing Authority
Really and truly the report wasn't as strong as I expected. It seemed like they didn't want to take a position on all the practices that LTPFA was doing that were not kosher, not having an annual audit, and annual report - all the things you'd normally see a government agency do. The board should comply with the local government budget act - why wouldn't they?
These are public projects and arguably you can say they will help the public at large, but they get into trouble with all the private development they started to do with the former chairman who is still being investigated.
Warren Caudle added:
I think this is one of those other things that we are seeing more and more today between government, Non Government Organizations, and nonprofit organizations. They become so intertwined and so convoluted and nobody understands who's who and what's what. I think most of that is by design. You've got all these groups spending money, doing whatever, and there's no accountability. There's so much soft pedaling around the issues it looks to me like somebody is trying to protect somebody else.
What everybody needs to be worried about is all this money getting spent, this money is bond money. This money is people's retirement. The bond owners are the ones that will lose. Not the city. We take this stuff so cavalierly.
Mike Stagg Concluded:
The whole thing is just operating like a private club. The legislative auditors drive that home.
Having read that report it's kind of superficial. There are some other issues that aren't addressed there. They raise ethical questions but don't go further.
There are questions about the way the attorney for the board has operated as both attorney and client. That to me is very troubling and there has to be questions raised. They pointed out that he's served as attorney for some of their partners as well. The questions they raised are the right questions, but it seems like they pulled back.
2. A bipartisan group of senators struck a deal last week to overhaul the federal student long program. What do you think about the legislation? Should the government be involved in student loans?
This is just another one of those things where the government goes out and creates a problem then claims it's everyone else's fault.
The student loan deal, where I think it came from was after WW11, the GI bill allowed all these veterans to go to school. So the universities staffed up, then all at once they all finished up and the student load went down. Then the Vietnam war came along and the same thing happened. After the draft stopped all these students vanished and these universities were sitting here saying "we need students, and poor students are better than no students". They sent out recruiters to find students but the students didn't have money to go to school. Then congress created the PELL grant. That wasn't enough so they came up with this student loans thing and congress guaranteed a portion of it. They were giving these kids a run-around in the schools, not teaching them a damn thing, sending them out after 2 or 3 years with absolutely nothing, and they couldn't get a job. But they owed student loans, so the lawyers told them to file for bankruptcy. Then the banks started screaming, "these little yahoos are taking our money and living off it then filing for bankruptcy" so congress said student loans could no longer be bankrupted.
So what they've basically done is targeted a group of young people, ripped them off, stolen from them, then they turn around and shackled them with this debt for the rest of their lives that they can't get rid of.
The loans are guaranteed to the banks by the federal government. The idea that the banks can then rip these kids off with a high interest rate, especially after we bailed the banks out, is ridiculous.
What the attempt was, and it looks like it's going to succeed is peg the interest rates to a lower rate tied to the treasury rates. I think that's a fair resolution.
The government created the problem then the government steps in and tries to save everyone.
The banks lend money with the idea that they are going to make some money but what is fair? When you have market rates as low as they are now why not peg it to the market rates with some ceiling?
Now it’s your turn to tell us what you think about today’s Wingin’ It Wednesday topics. Who got it right, who got it wrong, and who was way off? Let us know in the comment section.