The "568 Cartel" and the Secretary of Education

January, 2022

Washington — For those following the nation's student loan crisis, and the role of colleges and universities in it, a new lawsuit illuminates how financially needy students are shortchanged by what is called "enrollment management."

The lawsuit, against sixteen institutions called the "568 Cartel," is receiving much national attention.  The plaintiffs describe enrollment management as a "largely secretive practice" the purpose of which is to raise the net price of tuition for those with financial need.

What the lawsuit does not mention — perhaps because it is obvious — is that the institutions expect students to pay higher tuition with student loans. Nor does it mention that enrollment management is widely practiced throughout higher education and is a major contributor to borrowers' current (and counting) $1.7 trillion student loan debt.    

I'm hopeful that subsequent media coverage will recognize that under federal law, these practices must be disclosed to students under the Student Right to Know law, and the Secretary of Education has the power to bring institutions into line through limitation, suspension, or termination of institutions' participation in federal student aid programs — the "L S & T" powers.  

In Senate testimony in 2007, I addressed these problems in considerable detail and recommended that they be resolved.  The testimony is still available on the webpage of the committee that heard it.   

Subsequently, in a later blog post entitled "'Enrollment Management' is Out Of Control," I again pointed out the problems and identified the Secretary of Education's powers to deal with them.

But nothing happened, which brings us to the current litigation, which is directed to just the tip of the iceberg. 

The whole imbroglio could be straightened out by the Secretary of Education, whom I believe has an obligation to act against illegal enrollment management practices, wherever they exist.   This mess did not happen on the current secretary's watch, but he is now in a position to take decisive action.  There is no excuse to say no one knew what has been happening.     

Purposefully Lax or Purposefully Complicit?

December, 2021

Washington — Last week I received sixteen boxes of documents relating to the several lawsuits that I brought in 2007, on behalf of the United States, against student loan lenders.  The documents were released to me by legal counsel after reviews to comply with settlements and court decisions, with several more boxes to follow.  The litigation ended in 2019.

So far, I have looked at only two of the boxes.  They contain many documents new to me that show revealing communications among certain lenders, their interest groups, and officials at the U.S. Department of Education.   They cover a time when there was widespread waste, fraud, and abuse in the federal guaranteed student loan program.  

These documents remain relevant today for several reasons.  They answer many questions about who was involved.  They raise questions about how the abuses led to predatory lending practices (in terms of both quantity and quality), which have contributed much to the current student loan crisis.  Because some of the lenders involved are now servicers of the massive federal student loan portfolio, the documents are helpful in understanding how miscreant organizations that acted lawlessly, as lenders, would do the same as servicers.*  

Which leads to a question of what should be done in fairness to borrowers who have been victimized.  An important dimension of these documents is how they reveal that federal officials at the U.S. Department of Education were not only "purposefully lax" in their dealings with lenders, as described by historian Elizabeth Tandy Shermer, but purposefully complicit.   

Where does the complicity fit into the current discussion about student loan cancellations and modifications?  Often it is not considered, but nothing would be more appropriate than to discuss such complicity in the context of the existing statutory power of the Secretary of Education to compromise and settle loans.

Among the documents' highlights and surprises, so far:

•  Confirmation that PHEAA knew its particular claims for taxpayer subsidies had little basis other than the belief that its connections within the Department of Education would prevail against any challenges.  Its assertions — frequent in these papers, that it did not set out deliberately to manipulate loan movements among bond estates to generate sharply higher subsidies — are undermined by internal emails that show PHEAA initially did not want to make too many claims, so as not to draw attention to what they were doing, and that Deputy Secretary William Hansen would be instrumental in approving their claims.  

•  Emails confirming that PHEAA did not want to turn over such documents to the Inspector General for an audit, under penalty of perjury, and they never did.  That included emails showing the desire of CEO Richard Willey to make aggressive claims.  

•  Revelation of the roles of Federal Student Aid director Terri Shaw and David Dunn, Secretary Margaret Spelling's chief of staff.  When OIG and OGC lawyers challenged the higher subsidies (which could cost taxpayers billions of dollars), PHEAA threatened that they would have Dunn overrule them.  Dunn would later prove to be a disappointment to PHEAA.  On the contrary, Terri Shaw was complicit throughout.  It was under her directorship that FSA sent program review teams to lenders like PHEAA to approve the claims after the fact, the findings of which were not accepted by OIG and OGC.  She eventually resigned rather than face what she knew would be Congressional questioning.   

•  Confirmation of the centrality of Scott Miller, a PHEAA consultant and lobbyist, Steven McCullough of Iowa Student Loan, and Kathleen Smith of the Education Finance Council, a trade group.  Miller is continually contemptuous of those who would try to block the higher subsidy scheme.  McCullough serves as a conduit for Hansen after Hansen left his Deputy Secretary position, passing along suggestions as to how to bring pressure on the department's lawyers to fall into line.  Kathleen Smith wages internecine conflict throughout the loan industry to try to keep the scheme from unravelling.  

•  John Dean, a lawyer for the Consumer Bankers Association, wrote legal opinions for lenders to make higher subsidy claims based on his assessment of confusion in the Education Department and the huge "opportunity" it presented. 

•  Confirmation of dissent within the student loan community, with prescient expressions of concern that false claims could threaten the future of the whole industry. Sallie Mae chided PHEAA over the scheme; Henry Howard, a lender, wrote disparagingly: "A chimp could make money with... the alchemy.... Just incredible." 

These documents help fill in the blanks and corroborate previous accounts of the corruption, especially those written by Stephen Burd and Dan E. Moldea.  Historians should take note of the existence and content of these papers.  The revelations should be of considerable interest to those who are currently assessing the Secretary's powers to compromise and settle student loan debt.   


*Most of the documents come from discovery at PHEAA, which in 2021 decided not to pursue further federal servicer contracts, apparently in the hope that a retreat would wind down costly litigation and investigations, which intensified after PHEAA lost its sovereign immunity in litigation in 2017.    

More on "Drowning in Debt"

December, 2021

Washington — In the previous post, I offered initial thoughts about Elizabeth Tandy Shermer's book, Indentured Students: How Government-Guaranteed Loans Left Generations Drowning in College Debt.  It is an important work, worthy of further dissection and debate. 

It is the work of an outsider to the student-loan industry, a historian who brings formidable skills to her subject and whose analyses are often a refreshing departure from lesser works by authors who bring hidden and not-so-hidden agendas to their product.  

Conversely, I am a student-loan insider — and political scientist, as opposed to historian — whose observations and experiences sometimes do not line up in quite the same direction as Professor Shermer's analyses.   Let me illustrate with a working paper I wrote while at the U.S. Department of Education in 2003, and then turn to how the findings apply to Shermer's book.   

Using the databases of the National Center for Education Statistics, I looked at student financial aid distributions over time.  Here is some of what I found:

1.  Whether federal Pell grant funding for financially needy students went up or down over time, loans in students' financial aid packages went up, especially to the low-income.  Institutions superimposed their own, often conflicting priorities over federal grant and loan programs. 

2.  Low-income Black students were given the greatest loan burdens in student financial aid packages.  Non-needy students of all races were favored in aid packaging. 

3.  Many colleges placed private loans in student financial aid packages, with less favorable terms that federal guaranteed loans, even for students who had remaining federal eligibility.   

None of this was a big surprise.  I had previously written a peer-reviewed paper in 1997 that demonstrated how grants and loans were fungible in student financial aid packages, so the actual beneficiaries of various types of financial aid might not be those for whom it was intended.*   

More surprising were the reactions to the 2003 working paper.  

From the outset, it was difficult to work with NCES to get the data, as they did not want to see presentations by race by income.  I had been asking for this presentation for some time in NCES reports, but pressure from institutional interests prevented it.  Colleges did not like the idea of showing how grant aid was going to higher income students in general, let alone how bad this appeared from multiple angles when broken out by race.     

Several policy analysts in think tanks and advocacy organizations reviewed the working paper.  Will Marshall at PPI arranged a session to review it, along with other works on student financial aid.  One economist said she agreed with every aspect of the paper and its findings, but that they must not be shared outside the confines of the room because they revealed too much about how student financial aid practices actually worked.  If Congress knew, the thinking went, much of the advocacy work for more student aid funding would be undermined.  

The reactions to the working paper from my connections in the Black policy community were muted.  Analysts and advocates are organized around HBCUs and around TRIO aid programs, not around the issues of the bigger picture.  Sometimes they had been lukewarm to me in other circumstances, such as when I had previously worked in the Office of Legislation and Congressional Affairs and was known for thinking beyond the legislative agendas of those particular, more narrowly focused, interest groups.

The reaction was more positive with regard to the paper's finding that private loans were being placed in the aid packages of students who qualified for loans with better terms.  This was a message I passed along to colleagues in organizations like NASFAA and NACAC.  Within the year, word went out within the financial aid community that this should not be happening.  Private loans lost their luster for a few subsequent years (although they soon made a comeback). 

Which brings the discussion back to Professor Shermer's work and where it may or may not line up well with my own. 

Shermer is on-target in pointing out that "operations is policy" (p. 237).  It is not simply enacted statutes that are crucial to understanding today's student debt crisis.  How programs are operated in practice may be different, even wildly different, from the intentions that created them.  However, the context in which she explains this deals with how the Nixon Administration did not implement key 1972 legislation as Congress thought it would.  A better and more consequent illustration is how institutions subsequently came to implement neither version, but established their own, more self-serving operations, through which much of federal aid intended to benefit students has been deployed to serve institutional interests.  It was this that NCES was pressured not to show, and why representatives of institutional interests did not want to discuss research findings outside of friendly confines.  

As to matters of race, my experience suggests too much attention is paid in the book to HBCUs (thirty-one references in the index), as if "developing institutions" should be in the forefront of the discussion on racial inequities.  I make this observation fully aware that this is the customary approach of many scholars and journalists.  But HBCUs enroll fewer than ten percent of Black students.  Their institutional needs should not dictate policy on matters such as PLUS loans, and their frequent photo-ops with presidents should not mislead any of us into thinking that directing a few billion dollars their way will solve systemic, nation-wide issues in distributing student financial aid more equitably.  

In other words, consideration of Title III of the HEA must not eclipse dealing with longstanding disparities in Title IV operations.  Likewise, Title IV problems should not take a back seat to the idea that inequalities in society at large are responsible for those most in trouble with student loan debt, as suggested in this passage (p.199):  "Only later did researchers uncover that increasing enrollments and opportunities to borrow did not erase longstanding inequalities after graduation."  

Some researchers knew all along that the way Title IV operated, with its "opportunities to borrow" and its troublesome distribution of debt, was leading to big trouble.  Those problems would only be heightened when the Department of Education, already complaisant on the growing problems of student debt, came to be led by appointees from the loan industry itself who encouraged an anything-goes approach to lending in the early 2000s.  

Readers should know that the student financial aid foundation was already cracked well before that corruption-riddled era, with its explosion of dubious lending, commenced.**

Next month, I will participate in a panel with Professor Shermer and others who will have read her book.  I look forward to a good discussion.  


* See subsequent corroboration and further explanation, including that of "enrollment management," in Stephen Burd's four-part series, Undermining Pell. 

** For an account of the period 2002-2019, see Dan E. Moldea, Money, Politics, and Corruption in U.S. Higher Education, 2020.   

A New Work on Indentured Students

December, 2021

Washington —  Historian Elizabeth Tandy Shermer has written a welcome addition to the literature of the nation's ongoing student debt crisis.  The book, Indentured Students: How Government-Guaranteed Loans Left Generations Drowning in College Debt, looks back through the eras of the New Deal, the GI Bill, Sputnik, and the creation of the student loan industry.  

The book is unusually insightful on topics ranging from hierarchies across higher education sectors, to the relationship of student financial aid to college prices, to inequities by race and sex that have actually been exacerbated by student loans.

What is missing in the book is more development of the "how" in the title, particularly during the tumultuous first decade of the twenty-first century.   While earlier chapters admirably delve into the people who shaped policies for good or ill, the treatment of later eras leaves readers hanging without the same pursuit of who was responsible for what, why, and how.  Example (p.279):  

"With [the 2006] presidential primaries rapidly approaching, and investigations underway of abuses in student lending, the president fired industry insiders from a purposefully lax Education Department."

As someone who watched this happen from both inside the department and from subsequent litigation discovery, I can attest to the accuracy of the statement.  I also admire its perspicacity, as it goes well beyond conventional wisdom and packs the punch of truth.  But the book does not go on to explain how this left students drowning in debt.  Who were these people? What did they do? What investigations?  What abuses?  Readers are left guessing.  

If the Education Department was "purposefully lax" (and it was), what does that mean for borrowers who are now paying the price, as victims of predatory lending?  Does it mean the Department should remediate the damage done?  I believe the answer is yes, and that it can be done under existing statutory authority, namely the "compromise and settlement" provisions of 20 U.S.C. 1082.*  

There is a straight line from the corruption of the early 2000s to the current student loan crisis.**  One of the book's missed opportunities is that it does not illuminate this connection, to fulfill the promise of the book's title.  Otherwise, this is a remarkably insightful book from which we all can learn. 


* The Biden Administration has an opportunity to offer significant student loan relief by use of the compromise and settlement authority as outlined in a recent work by Claire Torchiana and Winston Berkman-Breen of the Student Borrower Protection Center.  See especially p. 44.  

** Given what the Department of Justice knew about the corruption of the era, it is perplexing that it did not act as it did later in the college admissions scandal "Operation Varsity Blues," when the perpetrators were prosecuted under federal RICO statutes.  The difference, apparently, is that the racketeering in the former case involved federal officials, which was just too hard for DOJ to take on.     

Fists and Noses, Hobbes and Locke

November, 2021

Lincoln — "Freedom" has taken on new definitions recently, acquiring meanings that have surprised me.  

I had thought the concept was long-since defined in aphorisms like "the freedom to swing your fist ends where my nose begins," and other such expressions.  Clever sayings imparted the idea that freedom has limits and carries with it responsibilities.  

"There is no freedom to shout fire in a crowded theater" also expressed the limits of freedoms guaranteed in the Bill of Rights, making clear that they are not absolute.  

Now the idea is abroad that freedom is violated by local, state, or federal government requirements to get vaccinations or wear masks for the protection of society from disease.  The notion, overly simplistic to me, is that a government should have no interest in what one does with his or her own body.

I grew up at a time when we had a military draft, when vaccinations were mandatory for school admissions, and most everyone accepted these as proper functions of government.  It was part of the understanding that government is obliged to act to "secure the blessings of liberty," an expression from our Constitution's preamble.  Certain personal sacrifices, large or small, have long been considered necessary in a society where "freedom is not free," another expression noting the limitations of freedom, especially popular with those who served our country in uniform.  

Re-defining freedom in a way that turns these laws and mores upside down should make citizens reflect on where the lines should be drawn between personal freedom and the duty of governments to protect and defend our society.

I would draw the line where governments begin to restrict the right to vote so as to deny us a Constitutionally guaranteed republican form of democracy; to limit the freedom to assemble peaceably; to limit freedom of movement without due process; to delay the administration of justice; and a whole lot more.   There are limits that government at any level must not transgress.

But governments through their inaction can also cross the line.  Permitting a person's fist to smash another person's nose denies more freedoms than it protects.  My freedoms, and those of a majority of Americans during the pandemic, have been curtailed by those who refuse in the name of their own self-defined freedom not to get vaccinated.  Government indulgence of fists over noses is a slippery slope in the direction of anarchy, which in turn invites authoritarian and totalitarian responses.  It is not a coincidence that many of those who most aggressively tout anti-vaccination "freedom" are also those who would use the government to diminish other freedoms.  This is a Hobbesian view of society, in contrast to the Lockean philosophy embodied in our country's founding documents.  

Perhaps the marketplace can help resolve these conflicts.  If the lives of the unvaccinated are more expensive to save, and treating them clogs up the hospitals and slows business recovery, let it be reflected in health insurance costs.  Likewise, I am not troubled by distinguishing the vaccinated from the un-vaccinated in the workforce, in the military, and in public admissions and accommodations, if the distinctions are part of an effort to recognize that the freedom to swing one's fist does indeed end where another's nose begins.  Philosophers like Bentham and Mill, who have best defined our freedoms, would approve.  

Nothing could be more compatible with the freedoms America traditionally stands for than agreeing on the need for vaccinations to secure the blessings of liberty.    


Defend the Canfield Name

November, 2021

Lincoln — The name Canfield is much storied and honored in Nebraska.  May it ever remain so.

James Hulme Canfield was chancellor of the state university during its early golden era.  The UNL administration building is named for him.  Robert Knoll, author of the authoritative history of the university, wrote, "James Canfield's record as chancellor is unsurpassed in the whole history of the University of Nebraska."

The great chancellor's daughter, Dorothy Canfield Fisher, grew up in Lincoln.  Subsequently, after returning to her family's New England roots, she became a celebrated Vermont writer.  She wrote fiction and non-fiction, for young and old.  She championed causes of women and minorities.  From her years in Lincoln she knew Willa Cather and maintained a lifelong friendship and correspondence with her.  Eleanor Roosevelt named Dorothy Canfield Fisher one of America's ten most influential women and upon Fisher's death wrote:

I had never known Mrs. Fisher intimately, but I read her books with constant interest and pleasure.... Mrs. Fisher was a woman of great spiritual perception, and for many years it has given me comfort if I found myself on the same side of a controversial question with her. We might discover ourselves to be unpopular at the moment, but in the end our position would probably prove to be the best one, I felt, if she believed in it....  May her influence be kept alive among us for a very long time.  

In 2017, a member of the Abenaki Native American tribe of Vermont controversially suggested that Dorothy Canfield Fisher's name should be removed from an annual children's book award.  She was accused of being a eugenicist and of disparaging French Canadians and Native Americans in her writing, particularly in the 1933 novel Bonfire.  

Another Vermonter joined in, making this startling claim:  "Fisher’s involvement with the eugenics movement informed the subject matter of much of her fiction, portraying an idyllic picture of Vermont, romanticizing rural values and describing, pretty unsubtly, the 'right' and 'wrong' kind of people."

Most of those who came to the defense of Dorothy Canfield Fisher, unfortunately, did so only tepidly. They did not push back with evidence that her link to eugenics was only an imagined guilt by association and that Bonfire was surely written as a rebuttal to the idea that heredity is destiny. Rather, they weakly offered that she was a "product of her time." Her name was removed from the award.

Those who have actually read Dorothy Canfield Fisher know that she was decades ahead of her time and deserves better. Which raises the question of the role of scholarship. Where is the academic community in interpreting her works and pursuing the truth about her?

I read Bonfire to determine if there is evidence to support the charges against her. Importantly, it was written the same year her daughter Sally married John Paul Scott, a Rhodes Scholar and zoologist who debunked eugenics and whose views likely shaped the novel.

The novel is set in a small town in Vermont. The protagonist is a district nurse who returns home after living and working in Paris in the 1920s, an autobiographical reference to the author herself. The townspeople see themselves as divided between the better folk who live in the valley and those with hereditary defects living in the hills above. Everyone in the novel knows everyone else's heredity, and they are all judged by the area's inhabitants accordingly.

I count at least thirty-five separate references in Bonfire to heredity.  The nurse herself, however, is not so sure about its influence.  She signals this early on with statements about how human differences might be explained by nutrition and education instead.  She sets up a boarding school arrangement at the local academy to give those living on the mountainsides a chance to improve themselves.  In doing so, she despairs of "the grim local cult of heredity, which made it one with Fate."

Her critics must have missed that sentence.  

A subplot of the novel is a comparison of the lives of two young women, one raised in privilege and one rescued from poverty and family dysfunction in the hills.  It is almost modeled as a scientific experiment.  The results are unclear.  As is often the case in science, the null hypothesis offers itself for rejection but there are too many variables to reach any glib conclusions.  

What is clear, however, is that easily-missed references in Bonfire to French Canadians and Native Americans are not in the voice of the author, but in the voices of those she challenges, those of the "grim local cult."  That matters, decisively.  Bonfire is a disturbing novel, but not in the way its latter-day detractors suggest.

The point is this:  it may be fashionable these days for some to disparage people who are not around to defend themselves, in the misguided hope that somehow it will reflect well on their particular causes.  It doesn't, and is counterproductive.  And indulging it does not reflect well on the academic community, which may know better but remains all too silent.  

The Canfield name deserves restoration.  Nebraskans should come to the defense.  


An Equivocal 2050 Comprehensive City-County Plan

October, 2021

Lincoln — Last week the Lincoln-Lancaster County Planning Commission voted unanimously to adopt a 2050 Comprehensive Plan.  It goes next to the City Council for approval.  

The chairwoman of the commission described the plan as an "excellent forward-looking vision."

Looking at parts of it, that is certainly the case.  Looking at other parts of it puts that judgment in doubt.

The new plan did not start out auspiciously, but as a business-as-usual, more-of-the same version of the 2040 Comprehensive Plan, with little to suggest full recognition that climate and other crises are looming. Some of the plan's language on environmental planning was actually two decades old.  The same could be said for housing, with reliance on developers to take initiatives despite the city's own studies that show they are not addressing housing needs adequately.  Food security planning remained marginal.  

Eleventh-hour recommendations from a coalition of citizen experts and advocates made many improvements in the final document.  It is to the credit of the Planning Department that it took many of the recommendations to infuse old platitudes with new language and new action items more attuned to the urgent needs of the times.  

Among those late additions were major improvements in addressing local food production and distribution issues, which had been badly neglected in previous planning iterations.  Natural resources planning also got a boost with new language to take into account carbon sequestration and habitat conservation.  This put more teeth into draft language on conservation design and the role of easements.  

But when invited to make climate-smart development a guiding principle of the new plan, the authors demurred by offering lesser formulations.  And so it was with suggestions for bolder action on energy, transportation, re-cycling, the workforce, and sustaining the natural world.  When experts and advocates noted the total absence of attention to the alarming disappearance of insects, and suggested local planning action measures to cut pesticide drift and nighttime light pollution, all the plan's drafters could muster in response was a reference to a Mayors' Monarch Pledge, a hortatory effort started elsewhere several years ago and badly mismatched with the realities of the insect world collapse.
To the credit of the plan authors, however, several issues were not dismissed but acknowledged as worthy of further discussion.   This counterbalances non-sequitur responses and too-frequent examples of carelessness that shaped the document approved by the commission.  Unfortunately, a rush to approval precluded more give and take to get a better consensus. It all gives the impression that the new plan is not so much a forward-looking document as a defensive effort, looking over its shoulder to avoid criticism from those who want to soft-pedal the challenges.  
When this plan is in place, with its mixture of vision and hesitancy, what happens when the plan's developer-driven growth maps clash with bolder expressions ventured in the plan's text?  Imagine a developer's application coming before the Planning Commission to place climate-unfriendly residential housing, with voguish dark, heat-generating roofs and vast expanses of impervious concrete, intermixed with chemically dependent monoculture lawns, next to tallgrass prairies.  The transportation infrastructure to support the residential housing will require roads over native prairie, destroying habitat and undoing carbon sequestration.   Will the application, based on old maps unchanged from earlier plans, be approved as compliant with the 2050 Comprehensive Plan?  

This is one example where more "discussion" is wholly appropriate.  One could even say that it is desperately needed.  Does the new plan give the Planning Commission the tools and guidance it needs to make its decision?  Maybe.  A few months ago, a similar proposal did not even raise an eyebrow as it went through the commission, its environmental effects totally un-noted.  Fortunately, the city council blocked it after many citizen protests.  

Calling this new plan "equivocal" is not necessarily a condemnation of it.  At least more voices are now being heard.   

The Lincoln Joint Stock Land Bank and its Troubling Legacy

October, 2021

Lincoln — Properties rest uneasily together in my rural neighborhood along West Superior Street.  They have widely different histories of witnessing happiness and tragedy, many linked for good or ill to the Lincoln Joint Stock Land Bank and its legacy.

Some namesake buildings at UNL may also not be at ease among their neighbors.  If you know the history of the Lincoln Joint Stock Bank, Sandoz Hall does not fit in well with Selleck Quadrangle, even with Love Memorial Library and Burr Hall, and certainly not with the Barkley building.  

The celebrated Nebraska writer Mari Sandoz, in her Depression-era novel Capital City, described bankers who "did a good bit of ... bragging — of farms and buildings foreclosed. One more bad year for the farmer who still imagined that war profits might soak down to him."

During the worst of those years, William E. Barkley was president and a director of the Lincoln Joint Stock Land bank; William A. Selleck was vice-president and a director; Don L. Love was a director and treasurer; W. W. Burr was on the board as an agronomist.  

All of the nation's joint stock land banks came under criticism in the mid-1920s — and onward — for foreclosing on farmers and sometimes taking the land for themselves, contrary to the mission established for them in 1916, which was to provide needed farm credit in exchange for tax-exempt status.

After a near-panic in the midwest over the farm credit crisis, Congress held hearings in 1927 on legislation to regulate the joint stock land banks through the Treasury Department rather than through the Farm Loan Board.  The House Banking Committee took testimony from the land banks, which defended themselves, including extensive testimony from William Selleck of the Lincoln Joint Stock Land Bank.  

"I have no knowledge of that at all"

Early in the hearings, the joint stock land banks' association secretary offered this defense, but stumbled over showing any compassion for farmers (emphasis added):

Mr. POWELL [W. W. Powell, secretary American Association of Joint Stock Land Banks] ...At this point, I want to turn back, if I may, because I have some figures that may come in here, which just arrived by air mail yesterday afternoon, and I am very anxious to submit them .... We have the annual report as of December 31, 1926, of the State Bank Commissioner of the State of Nebraska, likewise the annual statement of the Banking Commissioner of the State of Iowa, which reports cover the condition of all the State banks and trust companies under State supervision in each of those States. ... At this point I am very happy to say that if it was the intent of anybody to think of the joint-stock land banks as a horrible example these figures will dispel any such view of the matter, because these figures show definitely that of all the loaning agencies in the field the joint-stock land banks have the best record. Our percentage of real estate to capital stock is lower than that of any other agency. 

Mr. BRAND. Mr. Powell, have you any information in regard to what has become of the farmers who owned those lands being sold out by the banks; that is, what they did? 

Mr. POWELL. I have no knowledge of that at all. This information is taken from the official records of banking houses as obtained through the commissioner of banking's office, and has nothing to do with that, of course.

"This is only a subterfuge"

The chairman and members of the House Banking Committee then jousted back and forth with William Selleck over how foreclosures at his bank were handled, particularly about a bank employee who was a stand-in for the bank so local farmers would not know what the bank was doing (emphasis added):

The CHAIRMAN. [LOUIS T. MCFADDEN, Pennsylvania]  Some mention was made of the amount of the sale price and the amount of the new loan to the new purchaser. I would like to ask you a little more about those new purchasers. Were any of these purchasers employees of the Lincoln Joint Stock Land Bank? 

Mr. SELLECK. I will endeavor to answer that question fully, and then give you the facts just as you want. I will say this, that it has been the practice of this bank when we found that a farm must be taken back, to get a deed of compromise if we could and if the title was such that we could .... Where a deed of compromise has been possible, we have had a Mr. Norman Black, I think his name is, who has taken the deed in his own name. That is done for this purpose: In nearly all these cases that we have been able to get compromise deeds there has been the hope still existing in the mind of the farmer, and also in the bank, that this man might yet pull himself out and go on with his contract and save his farm ....   I started to tell about Mr. Black. When we find that we can get a title of this sort and the farmer still has hope, so that if this man can get himself together he can redeem within the year, he may go without further expense. We believe that the fair thing for the farmer; we believe it is giving him another chance, and we do not want his land. 

The CHAIRMAN. Mr. Selleck, does Mr. Black execute his mortgage to your bank? 

Mr. SELLECK. The mortgage is not disturbed; if it be a deed of composure or deed of settlement, it is allowed to stand during this year. 

The CHAIRMAN. In the name of the original borrower? 

Mr. SELLECK. In the name of the original borrower. 

The CHAIRMAN. Notwithstanding the fact that he has lost title to the property? 

Mr. SELLECK. He has a year in which he may still redeem; and if he redeems within that year, then the title is given back and the matter goes on. 

The CHAIRMAN. In the case of foreclosure, what happens? Does Mr. Black buy that property in for your bank ? 

Mr. SELLECK. Not generally; there have been a few instances where he has. 

The CHAIRMAN. And he issues his mortgage to the bank?  

Mr. SELLECK. I think there is just one instance where he has issued mortgages. 

The CHAIRMAN. To what extent? 

Mr. SELLECK. My remembrance is there was only one instance.... 

Mr. WILLIAMSON. May I ask right there, in the event of Mr. Black taking over the property, if he should sell it and make a profit, does he give that profit to the bank? 

Mr. SELLECK. Yes. ...

Mr. STEVENSON. I want to ask you this question: What becomes of the rents and profits of it in the meanwhile? That is the only question that would seem to be a place where the bank might get into a little trouble. 

Mr. SELLECK. The bank gets that; the bank manages these farms. 

Mr. STEVENSON. You require provision to be made in that arrangement so that the rents and profits go to the bank? 

Mr. SELLECK. Yes, sir . 

Mr. STEVENSON. So as to pay running charges? 

Mr. SELLECK. Yes, sir. 

The CHAIRMAN. Is there any other officer or director or employee who acts in a similar capacity for your bank as does Mr. Black? 

Mr. SELLECK. No, sir. 

The CHAIRMAN. So that all of the transactions incident to foreclosure and sale are handled by your bank in the name of Mr. Black? 

Mr. SELLECK. Yes...

Mr. STEVENSON. Let us get at that question and see if I understand. That applies where there is a foreclosure sale and Mr. Black has purchased under the foreclosure, and, therefore, your lien had been eliminated or wiped out. 

Mr. SELLECK. Yes, sir; and in those two cases we have a written contract. 

Mr. STEVENSON. At any time prior to the time that the sheriff gave his deed, of course, that would not be the case. 

Mr. SELLECK. Yes. 

Mr. STEVENSON. But after the sheriff has given his deed it would be a fact? 

Mr. SELLECK. Yes, and in those cases we have a written contract with Mr. Black. 

Mr. STEVENSON. Does Black bear the loss, if any, on that transaction? 

Mr. SELLECK. No, sir. 

Mr. STEVENSON. Who bears the loss? 

Mr. SELLECK. If there is a loss, the bank would bear it. 

Mr. STEVENSON. If he had a profit, does Black get it? 

Mr. SELLECK. No, sir. 

Mr. STEVENSON. If he should take that over and sell it at a profit, would that profit go to the bank? 

Mr. SELLECK. Yes, sir, 

Mr. STEVENSON. Why do you have Mr. Black step in; why does not the bank do that? 

Mr. SELLECK. For this very good reason, as I think you will see: The minute that a farm goes into the name of the bank it loses at least 25 per cent of its sale value. 

Mr. STEVENSON. I do not see that. 

Mr. SELLECK. If you were handling land I am sure you would appreciate it. There is no bank, no receiver, no public officer that can ever get the full mortgage value of the land. The buyers in the immediate neighborhood will say " That is a forced sale." 

Mr. PRALL. Do they not know that they have a man who is connected with the bank? Do they not know that this is only a subterfuge so far as that is concerned? 

Mr. SELLECK. No; I do not think so. We have not more than one farm in any one place, probably not more than one farm in one locality. 

The CHAIRMAN. Is Mr. Black compensated by salary? 

Mr. SELLECK. He is a regular employee.  

The CHAIRMAN. He receives no fee other than salary! 

Mr. SELLECK. No, sir. 

The CHAIRMAN. What is his salary?

 Mr. SELLECK. I do not know. 


"Would you not consider it a little unethical?"

The committee goes on to discover that there are other procedures at the Lincoln bank that are not transparent, also ostensibly to help farmers (while not telling them) but which make a side profit for two of its directors (emphasis added):

The CHAIRMAN. In other words, you have no other accommodation [for] borrowers? 

Mr. SELLECK. No, sir. But in our bank this has been done, which did not affect the real estate title at all—I want the committee to know all the facts, so far as I know them: Mr. Barkley and Mr. Grainger several years ago established an account called the “ Barkley-Grainger account." That was used for the purpose of advancing money for delinquent payments. They took up the delinquent payments and as their reward for that got the 8 percent that the statute allowed for delinquents. 

Mr. FENN. Mr. Barkley and his companion got that?  

Mr. SELLECK. Yes, sir; the bank having been paid by them the delinquent payment. 

Mr. FENN. They were making a little rake-off on it then? 

Mr. SELLECK. I doubt if, as a matter of fact, it ever exceeded 6 per cent net

The CHAIRMAN. In other words, making delinquent payments and amortization payments for the account of the mortgagor when he is unable to make that payment! 

Mr. SELLECK. Yes. 

The CHAIRMAN. Otherwise that loan would be in default and would have to be recorded as a defaulted loan on the books of your bank, would it not? 

Mr. SELLECK. That is not an infrequent thing, Mr. Chairman; for instance, let me call your attention to this fact, that in the very large number of loans of any of these banks, I believe I am sure it is true of ours — there are second mortgages held by commercial banks or by other investors. When a payment becomes due, it is very customary for us to notify the second mortgagor, in case the original mortgagor does not remit promptly — to notify this second lien holder, advising them that there has been a delinquency and that his second lien is in danger. The second lien holder, as long as the commercial banks were in good shape, invariably took that up. I see no difference between that, Mr. Chairman, and the Barkley-Grainger account taking it up. 

The CHAIRMAN. To what extent has Barkley and Grainger assumed to pay for defaulted interest? 

Mr. SELLECK. There has been no contract at all. 

The CHAIRMAN. As a running guess, how many of those loans would be in default if they had not assumed and paid interest? 

Mr. SELLECK. I do not have that information . But most of their payments have been on mortgages where the farmers have had three months' or six months' leeway. It did not feel, as was brought out before the committee several days ago, that they had any right under the law to grant extensions; but these men could take up the delinquency and carry it at their own convenience. 

The CHAIRMAN. Then Barkley and Grainger are directors of the bank, are they? 

Mr. SELLECK. Yes, sir. 

The CHAIRMAN. And also members of the executive committee? 

Mr. SELLECK. Yes, sir. 

The CHAIRMAN. Suppose some of those mortgages on which Grainger and Barkley had assumed a payment of interest should default, has the Lincoln Bank ever reimbursed them when foreclosures have taken place? 

Mr. SELLECK. I do not know that it ever has. Commissioner Williams tells me that the last examination shows a record of it. I can not explain it. There must be something about it of which I do not know the facts. I am not trying to dodge your question at all. 

The CHAIRMAN. The point is whether because of this slump in real-estate values out there your bank and other joint-stock land banks were carrying in one way or another on a hocus-pocus plan these farm lands and making them appear as live mortgages or not? 

Mr. SELLECK. I can answer that in a broad way.  

The CHAIRMAN. That presents a very serious angle, if such is the case, particularly if any of these mortgages are still held as security for bond issues. And I am assuming that these Barkley and Grainger loans, where interest was paid, that many of them are on deposit as security for the bonds which have been sold to the investing public; is that correct or not? Or have they been withdrawn as security for the bond issues? 

Mr. SELLECK. I can not answer that question right now; I do not know what the facts are. But I want to say that the Barkley Grainger account has been mostly used in foreclosing of loans that have been paid by the borrower before the suspense of two years have gone by. It has been a sort of revolving fund with which they have taken care of the man who needed to have a little time before he could get his money. 

Mr. WILLIAMSON. Was that gratuitously done or to make money? 

Mr. SELLECK. Entirely —

Mr. WILLIAMSON. They did this without profit? 

Mr. SELLECK. They get the benefit of 8 per cent. The law provides that delinquency will bear 8 per cent from the date of delinquency until paid, and they get the benefit of that. 

The CHAIRMAN. You state they have established a fund. Is that fund then deposited with the Lincoln Joint Stock Land Bank or is that in a separate institution? 

Mr. SELLECK. It has been deposited with the Lincoln Joint Stock Land Bank. The whole thing appears in the records of the bank. There has been no effort 

The CHAIRMAN. Is it the general practice of the Lincoln Joint Stock to take deposits of trust funds? 

Mr. SELLECK. Oh, no. This is not a deposit in that sense at all. They have simply provided funds with which these payments have been made. 

The CHAIRMAN. So they have established a fund with the Lincoln Joint Stock Land Bank to take up these delinquent payments of interest and amortization. Are they always consulted when this account is charged, or is the Lincoln Joint Stock Land Bank given full authority to charge up any defaulted interest to this account? 

Mr. SELLECK. I do not believe I quite understand your question. 

The CHAIRMAN. In other words, tħis is an account with the Lincoln Joint Stock Land Bank to the credit of Barkley and Grainger. Have the Lincoln Joint Stock Land Bank officers or employees authority to charge to that account any defaulted interest? 

Mr. SELLECK. No, sir. It is entirely optional with Mr. Barkley and Mr. Grainger whether they will buy that delinquency or not. 

The CHAIRMAN. In other words, they negotiate with the borrower? 

Mr. SELLECK. No, the borrower does not know anything about it. 

The CHAIRMAN. The borrower does not know anything about it? 

Mr. SELLECK. No, sir. 

The CHAIRMAN. So far as the borrower is concerned, he is in default? 

Mr. SELLECK. Yes, sir. 

The CHAIRMAN. And does not know any one has paid his interest? 

Mr. SELLECK. No, sir. 

The CHAIRMAN. That is a confidential arrangement between the Lincoln Joint Stock Land Bank and Barkley and Grainger? 

Mr. SELLECK. Yes, sir.

Mr. GOODWIN . How is delinquent interest carried where Grainger and Barkley pay the interest? 

Mr. SELLECK . So far as the bank is concerned, there will be no delinquent interest any more than with a second mortgagee. 

Mr. BEEDY. Does it not show up on the books as delinquent? 

Mr. SELLECK. No, sir; no more than when a second mortgagee pays. 

Mr. ALLEN . Is this foreclosure added to the balance of mortgaged indebtedness? 

Mr. SELLECK. That would come in the hands of Barkley and Grainger as a second lien. 

Mr. PRALL. Would you allow any other person to come in and do this thing as Barkley and Grainger are doing? 

Mr. SELLECK. We seek the second mortgagee always to do it. 

Mr. PRALL. If they do not do it, these two men do it all? 

Mr. SELLECK. Yes, sir; nobody else has.volunteered to do that sort of work. 

Mr. STEVENSON. The man that has got the lien has got to take care of you or lose his lien? 

Mr. SELLECK. Yes, sir. 

Mr. STEVENSON. And you give him that opportunity? 

Mr. SELLECK. Yes, sir. 

Mr. BEEDY. This arrangement is set up only in all those cases where the original borrower has been unable to get a second mortgage on the property? 

Mr. SELLECK. Not in all of them, but wherever it is done the facts are set out on the books exactly as they are. 

Mr. BEEDY. Wherever the original mortgagor has not been able or never tried himself to get a second mortgage, you then seek a second mortgage, if possible, before you avail yourself. 

Mr. SELLECK. Oh, no, sir. 

Mr. BEEDY. I understood you to answer Mr. Prall that you always sought a second mortgage? 

Mr. SELLECK. We seek the second mortgagee and try to get him to take up the delinquency. 

Mr. BEEDY. You do not try to get a second mortgage? 

Mr. SELLECK . No, sir. 

The CHAIRMAN. Mr. Selleck, on some of these properties which you have been discussing here, is it a fact that your bank holds them part as real estate and part as mortgage loan? 

Mr. SELLECK. I do not know of any such instance. 

The CHAIRMAN. You are a lawyer, of course, and understand the Federal farm loan law? 

Mr. SELLECK. Yes. 

The CHAIRMAN. Is this practice, to which you are referring here this morning, of two directors, or Mr. Barkley, who is president of the Lincoln Joint Stock Land Bank, creating a fund to provide for defaulted interest, in strict accordance with the Federal farm loan act, in your judgment? 

Mr. SELLECK. I know nothing against it, any more than where there is payment by a second mortgagee. 

The CHAIRMAN. Would you not consider it a little unethical? 

Mr. SELLECK. I do not see why, if the whole thing is set out on the books the way it is, it is certainly, Mr. Chairman, in the interest of the mortgagor, giving him another chance. 

The CHAIRMAN. Do you not think where these mortgages are put up as security back of farm-loan bonds that are sold to the investing public that that is rather a breach of faith to the bondholders? 

Mr. SELLECK. Just let me analyze that a moment, and see whether it is or not: These mortgages are put up, presumably, at 50 per cent face valuation. Is the bondholder in any way disturbed in his relations because one amortization payment or two or three or even four or more have been paid and become a second lien to his lien? Is he damaged thereby? 

Mr. STEVENSON. In addition to that, Mr. Selleck, the bare payment reduces the amount of the principal! 

Mr. SELLECK. That is exactly what I called attention to. 

Mr. STEVENSON. And that increases the security? 

Mr. SELLECK. And part of the principal has been paid. 

Mr. PRALL. Why do we not create another bank, board, or another committee, or something of the kind to take care of all these things of that nature which are being done by the officers of the ban ? If it would pay them, it might pay the Government. 

Mr. WILLIAMSON. I do not think it is possible for them to do it except as a matter of protecting their bank. 

Mr. SELLECK. We do not do it for the same reason that we are all in just the same fix.  It is a temporary matter - I believe temporary because the same values are concerned. 

Mr. PRALL. Have you done this very long? 

Mr. SELLECK . I can not tell. It has been done perhaps two or three years. 

The CHAIRMAN. Mr. Selleck, in connection with this friendly arrangement between Barkley and Grainger with the joint-stock land bank referred to a moment ago, I asked you whether they had ever been reimbursed by the bank for any payments. It is not quite clear to me what your answer was on that. 

Mr. SELLECK. I said I did not know of a case until Commissioner Williams called my attention to it that there was one case. Was there more than one? 

Mr. WILLIAMS. I will have to refer to the report of the examiners. 

Mr. SELLECK. Mr. Williams told me that the report showed that the bank had reimbursed Grainger and Barkley on one case. 

Mr. ALLEN. Because of Barkley's indebtedness, if the land is never redeemed and the bank becomes the owner of the property, are they reimbursed for the money they have advanced, or do they take a loss on that? 

Mr. SELLECK. I was trying to say that Commissioner Williams says that in one instance the bank reimbursed them. I do not know why that was, because the understanding that I have always had was that they secured a second lien for the amount of money they paid. If it went to foreclosure the only way they could protect themselves would be for them to buy in the farm, and they have done that in one instance. 

The CHAIRMAN. It would seem to me to be unfair on the part of the joint stock land bank to refund to Barkley and Grainger where default had occurred and the bank had had to assume that. 

Mr. SELLECK. I agree with you, Mr. Chairman, and I frankly state I do not know what the explanation is. But I feel sure that, having the confidence I have in Grainger and Barkley, that there must be some reason. So I prefer to say I do not know.


"Capital is entitled"

Toward the end of the hearing, William Selleck speaks to his priorities, and states that anything that gets in the way of dividends to capital is uneconomic and unwise (emphasis added):

Mr. SELLECK.  If I may, I want to speak just a moment on this section of net earnings, section 23 - anything that affects net earnings affects the power to pay dividends. If I understand corporate existence at all, this would be fundamental, that the first duty of a board of directors of a corporation, whether that corporation be manufacturing, transportation, banking, or any other business function where capital is invested, it is to pay dividends; and their duty is to so conduct the business of that corporation that dividends may be paid. I think, Mr. Chairman, that is fundamental. If you can not pay dividends you can not get capital. It does not make very much difference what the dividend is, so long as it is a reasonable return on the capital. But capital is entitled to a regularity in the payment of dividends and assurance of it, and any regulation or rule which unnecessarily hampers the directors in the payment of a legitimate dividend is an uneconomic and unwise rule, if you want the system to function.

It is noteworthy that William Selleck does not acknowledge the tax-exempt nature of his bank, and any responsibility for giving back to taxpayers what they have foregone so that his bank can maximize dividends.  Congress, wisely in my opinion, took away the tax-exempt status of these banks in 1933.  

He also undermines arguments set forth earlier that his bank was sympathetic to farmers — that apparently happened only when there was an angle for the bank, or its directors, to profit.  

Several properties along West Superior were financed and foreclosed by the Lincoln Joint Stock Land Bank.  One was once owned by the daughter and son of the bank's last president and is again owned by a bank that is out of step with its current neighbors over the area's future.  The neighbors do not consider return to capital as "entitled" and think that environmental and climate concerns are more important than a bank's sense of duty to its own enrichment.  Local government officials, out of habit, continue blindly to follow the siren of "growth" and reflexively pay tribute to capital's asserted entitlement, at their own environmental peril.    

Also of note:  Selleck Quadrangle at UNL is named for William A. Selleck's son, John Kent Selleck, not for the father.  William A. Selleck's and William E. Barkley's other bank, the Lincoln National Bank and Trust Company, was robbed in 1930 in an infamous heist at 12th and O Streets and subsequently closed.   

In a future blog post, I'll look at the legacy of joint stock land banks in terms of forerunners of Government Sponsored Enterprises (GSEs) and how some of those ventures did not turn out well, either, at least for the public.  There are disturbing parallels with similar entities that were created to provide student-loan credit but wound up abetting a national student-loan crisis for tens of millions who took out loans for college.  

Time to Re-think the Urban versus Rural Premise

October, 2021

Lincoln —  The ink is still drying on Nebraska's redistricting effort, so it is not yet clear who has prevailed in what has become a decennial gerrymandering exercise.  

During the process, there was a lot of huffing and puffing about rural areas losing out to urban areas, the apparent premise being that rural voters protect rural interests and urban voters do not.  I'm not at all sure that this is a valid premise.

Rural voters over the past few decades have bought into a get-big-or-get-out agricultural policy and, sure enough, a lot of farmers got out, depopulating farm country, including small towns.  That must be reflected in the redistricting maps, by law. 

Meanwhile, urban voters have been the ones trying hardest to save rural hospitals and nursing homes, leading referenda efforts.  The fight for conservation of rural lands is being led by people who live in urban zip codes.  Of the seventeen Unicameral sponsors of the Farm-to-School bill, enacted in 2021 to facilitate farm to school markets, ten were urban senators, seven rural.   

The comparatively poor response of rural Nebraskas to Covid vaccination efforts reflects the same depopulation pattern.  It will marginalize rural Nebraska even more, and make it an undesirable place to move or to stay.*  Below is a vaccination map from October 2, 2021.  

In the next redistricting, will we see pleadings from rural areas for more protection?  Protection from whom?  Urban voters want a thriving rural Nebraska; do we in rural areas want one?  We're not acting like it.  


* In 1923, Nebraska's greatest author, Willa Cather, observed that the generations following the pioneer generation were not up to the standards their forebears had set.  It was a recurring theme of her novels. She was prescient.   

Another Student Loan Servicer Falls

September, 2021

Washington —  Another troubled federal student loan servicer now bites the dust.  That makes three this summer.  Many are saying good riddance.

A worrisome question is where these loans will now go for servicing.  The latest servicer to exit intends to hand off its portfolio to Maximus.  Who and what is Maximus?  It's hardly a household name in student loans.

Thanks to a remarkable research effort by Deanne Loonin, "Illusory Due Process: The Broken Student Loan Hearing System" 11 U.C. Irvine L. Rev. 173 (2020), we know that Maximus may not be a good place for sevicing.  She writes:

In the hearing area, the Department [of Education] appears to rely heavily on Maximus for hearing administration and related tasks. This is a company that has a long track record of problems and sanctions related to federal and state contracts....  

She goes on to describe in detail situations no borrower should have to endure, and no federal taxpayer should be supporting.  

Another must-read work for anyone connected to student loans is Josh Mitchell's The Debt Trap: How Student Loans Became A National Catastrophe (2021).  A WSJ reporter, he has unusual insights into the nation's student loan troubles.

Many years ago, when I was in the U.S. Navy, all personnel who handled important national security materials were required to undergo a National Agency Check (NAC) or a Background Investigation (BI).   Government agency files were searched to find any records of bad behavior; investigators called on citizens who knew individuals to determine their fitness and character.  

Student loan servicers should be similarly vetted.  What would turn up in agency files about the fitness and character of those who service student loans?  From my experience — and it is extensive — a lot of servicers would not pass muster, and should not be entrusted to handle student loans.  How some have escaped sanctions and even debarment is a question that now must be asked and answered, given the inevitable shake-up that is occurring.

A student loan operational crisis will soon be upon the nation.  The repayment pause granted during the pandemic will expire at the end of January.  Millions of borrowers will be assigned new servicers, who will have only the old servicers' records to go by, records that we know are riddled with errors created by sevicer ineptitude and sometimes corruption.  

The Department of Education should be taking steps to cancel as many loans as possible in the best interest of the country.  Those borrowers who have paid back their principal and interest at the government's cost of money should have their loans cancelled now.  Any remaining balances due to fees, penalties, compounding of interest, and other charges have a too-high likelihood of being manipulated by servicers toward their own ends, not based on law or regulation.

In the case of the Public Service Loan Forgiveness program, mismanaged terribly by PHEAA, loans should be cancelled after ten years of public service.  Again, too many borrowers are being disqualified for servicer error, not for failure to live up to their obligations under the purpose of the program.   

The Secretary of Education has the authority under existing law to make these decisions, in the interest of both borrowers and taxpayers.*  The Secretary may also have additional authority under "compromise and settle" law, but he surely has authority to cancel loans as recommended above, as part of an attempt to deal with the upcoming operational crisis. 


* Taxpayers have a big interest in seeing student loan programs operated correctly and efficiently.  They benefit when borrowers are able to move ahead with productive lives, whether through repayment, cancellation according to law, or, as is provided to other debtors when necessary, bankruptcy.  Taxpayers should not be paying the costs of corruption among lenders, servicers, and collectors that keep people in debt as long as possible so as to maximize profits from them, yet that has been all too common for many years.