My organization, Citizens for Responsibility and Ethics in Washington, recently requested information from the Department of Education and the University of California system about the role former Education official Robert Shireman — and the organization he heads, California Competes — are playing in the development of education policy. CREW believes Shireman’s coziness with Wall Street short sellers, and his overall indifference to playing by the rules, should make government officials wary of working with him.
Shireman served as deputy undersecretary of the Department of Education and as a consultant to the department from 2009 to 2011. During this time, he spearheaded the department’s efforts to increase regulation of for-profit colleges to ensure that students had a fair chance of finding “gainful employment” after graduation. This subject became controversial, in part because of Wall Street’s efforts to influence education policy.
After well-known short seller Steve Eisman testified before the Senate regarding for-profit colleges, CREW began investigating whether Wall Street investors were attempting to influence Education’s regulatory process to drive down the stock price of for-profit colleges, allowing them to reap financial gains. Using the Freedom of Information Act, CREW uncovered incriminating emails revealing that Education officials, including Shireman, were in contact with short sellers about the proposed regulation. Based on these records, CREW asked the Securities and Exchange Commission in 2011 to investigate possible market manipulation and twice asked Education Secretary Arne Duncan to examine the improper influence on Education’s regulatory process. We also asked the department’s inspector general investigate Shireman.
More than three years after he left Washington, Shireman remains the subject of a long-running inspector general inquiry into whether he violated ethics laws by discussing sensitive government information with The Institute for College Access and Success, an organization Shireman founded and led before joining the Obama administration. TICAS refused to comply with an OIG subpoena for records regarding its interaction with Shireman, forcing the Department of Justice to file legal action. In March, a federal court ordered TICAS to turn over documents. Why would TICAS have fought so hard to prevent the release of these records unless they reveal improper conduct? Therefore, CREW filed a new FOIA request, asking the inspector general for records in an effort to discover where the investigation now stands.
When Shireman left the department in June 2010, he was immediately hired as a consultant. Despite this change in employment status, documents show Education officials allowed Shireman to continue receiving health care, paid leave and retirement benefits although the department’s personnel manual specifically prohibits consultants from receiving such benefits. When CREW sought details about Shireman’s consulting agreement, Education redacted the identities of the officials who signed off on the arrangement.
Shireman was off the Washington radar until recently, when he returned to town in May and spoke at an event, criticizing for-profit colleges. A second FOIA request we submitted to the Department of Education will reveal whether he is still working with policymakers.
To be clear, CREW’s only interest in this matter is ensuring government agencies and officials act in accordance with the law and in the public interest. CREW believes this cannot be achieved if the people who craft government regulations don’t meet the same high standards of conduct they demand of those they regulate.
Greater government oversight of for-profit colleges is clearly in order. Allowing students to take out loans — paid for with taxpayer dollars — that go into the coffers of unethical for-profit schools, while leaving students with little hope of ever graduating or finding a job is wrong. Congress, the Department of Education and the Consumer Financial Protection Bureau have a role to play in policing such outrageous conduct. Still, Shireman’s presumably good intentions don’t justify his improperly sharing information with Wall Street investors. Given his shaky record, government regulators should be wary of working with Shireman.
Melanie Sloan is the executive director of Citizens for Responsibility and Ethics in Washington, a government watchdog group.