Regents Examine Credit Card Scam

September 28, 2007, 9:45, 11:30 a.m.

Stonewalling Not a Winning Strategy . . .

. . . but President Sally's Mason's May Well Be
The current flap over the Regents' universities profiting from secret deals with bank credit card companies -- helping the banks increase students' debt loads with outrageous interest credit card fees by sharing otherwise-private mailing lists and data about the students and their parents -- has now come to the attention of the Regents. Clark Kauffman, "Regents Question Dealings with Bank," Des Moines Register, September 28, 2007. See blog entries for September 26 and 27, and Editorial, "Universities shouldn't push cards to students; Don't further temptation to increase debt," Des Moines Register, September 25, 2007; and Editorial, "Disclose Details of Deals," Des Moines Register, September 25, 2007.

Since the universities don't seem to want to take the revelations seriously, the Regents are to be praised for trying to take a look at what's going on.

On the other hand, this is just a subset of all the consequences that we've seen flow over the past couple of years as a result of the absence of any meaningful theories and policies of governance -- a clear allocation of responsibilities between the Regents and the universities' administrations, the substitution of meaningful and measurable John Carver-style "ends policies" for vacuous "strategic plans." I've written about these on numerous occasions, see for example, Nicholas Johnson, "An Open Letter to Regents on 'Governance,'" in "UI Held Hostage Day 451 - Open Letter to Regents," April 17, 2007.

And, of course, the issue for which student credit cards is but a subset is one of the most serious and overriding confronting higher education today, one I spelled out in Nicholas Johnson, "It's the Mission of Higher Education -- Not the Naming of Buildings" in "UI's 21st Century Mission," September 20, 2007. With a meaningful governance process in place these issues (the academy's relation to corporate America) would have been long since identified, thought through, resolved, and been embodied in clearly articulated policies.

Sadly, a little "revenue is needed" crept into the Regents' inquiry. Kauffman reports, "Among the questions was one asking for the potential financial impact on the schools and their alumni associations if the agreements with Bank of America were vacated." (I'm aware it might be irresponsible for the Regents not to know the answer to that question, but one can hope the answer would not be decisive in deciding what to do about an arrangement the schools never should have entered into in the first place.) And "The board staff has not requested information pertaining to the use of student-athletes in the credit card promotions" -- a centerpiece of the entire arrangement.

The universities' administrators stone-walling on the details, in addition to being extraordinarily unseemly for public institutions, will probably come around to sting them like a scorpion in the end. Richard Nixon experienced that phenomenon, and it's amazing the difficulty others have had learning that lesson.

The regents are also asking for details pertaining to the financial benefits to the universities and alumni groups from the credit-card marketing; the schools' policies on sharing student and parent information with the alumni groups and others, and the process through which Bank of America was selected as the official credit card provider for each school's alumni group.

. . .

The answers to the regents' questions could shed more light on the schools' partnerships with Bank of America.

At the University of Iowa, many details of the relationship remain secret because of the manner in which the partnership was formed. The bank signed a contract with the private alumni group, and then the alumni association signed a contract with the school.

Only the contract signed by the school and alumni group has been made public. The alumni association refuses to disclose the terms of its deal with Bank of America and has also refused to say how much it is paid by the bank.

At Iowa State University, alumni association officials refused to make public its contracts with the bank and the school. After the Register requested the documents, alumni association President Jeff Johnson wrote to ISU President Gregory Geoffroy and others, saying, "I will not release our Bank of America agreement to them. I will not release the agreement between us and athletics (to) them, either."

Looks like this is all going to get very ugly before it gets better once it starts off with that kind of arrogance and intransigence. See, Editorial, "Disclose Details of Deals," Des Moines Register, September 25, 2007.

Meanwhile, UI President Sally Mason is Clarifying the Mission
As I've written from time to time, my primary concern about the UI's 21st Century mission is not so much what it ends up becoming (although I have my preferences) as it is the failure to have it articulated clearly. With ambiguity comes the potential for hypocrisy and inconsistency.

Recently, in a major though largely unreported statement, President Mason had some revealing things to say that, at a minimum, at least give us some insight into what she thinks we're all about.

Note: If anybody in Jessup is reading this, and if it was not all extemporaneous and unrecorded, how about posting the text of those remarks on the President's Web page?

Here's some of what The Gazette reported:

University of Iowa President Sally Mason is committed to an active economic development role for the university, going far beyond its primary mission and contribution of creating a highly educated work force.

Mason, speaking Wednesday to Corridor business leaders at the Iowa City Area Development Group’s annual meeting at the University Athletic Club, said UI’s research enterprise contributes significantly to Iowa’s economy.

“Our faculty, staff and students generated an all time record $382.2 million in grants and contracts for UI research, education and service in fiscal year 2007,” Mason said. “This amounts to almost a 5 percent increase from fiscal 2006.” Mason said the UI has brought more than $2 billion of research funding into the state’s economy in the last six years. She said a major portion of the research funding has been used to create jobs.

“Research projects often require hiring laboratory and other kinds of employees,” she said.

“We’re always in the employment business. The University of Iowa is a job creation juggernaut.” Mason said the university is working on technology transfer, commercialization of research, and academic entrepreneurship, which she termed “exciting opportunities in the world of the university today.” “The good universities, the best universities are doing this, and the University of Iowa is among the very best,” she said.

“Working in the marketplace is not just an exciting extension of research activity. I actually see it as a very important aspect of our public engagement obligations.”

George C. Ford, "‘Exciting opportunities’; UI leader, group voice commitment to state’s economy," The Gazette, September 27, 2007, p. B10.

And, in this connection, note the relationship between what President Mason had to say and what I highlighted from a recent Dick Doak column: Nicholas Johnson, "The Good News and the Bad News/The Good News/Richard Doak: Almost Always Good News" in "UI Rips-Off Students Because . . . 'Revenue is Needed,'" September 25, 2007.

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