From a powerfully written takedown of Yeshiva University’s latest effort to infantilize its constituents and evade its responsibility.

By Yaacov M. Gross.

[President Richard Joel] offered a small statistical comparison between the performance of YU’s long term investment pool since 2002 versus that of all other university endowments over this period. The comparison purports to show that the compound annual growth rate over the period was 6.3% for YU’s pool vs. 5.3% for the other university endowments, meaning that YU’s investment strategy produced superior results. But a close reading of the comparison raises disturbing questions. For example, why was 2002 chosen as the starting point for the measurement as opposed to fiscal year 2005 (the year in which, according to the article, YU’s current leadership assumed control of the portfolio and sold off more than half of the endowment’s conservative investments)? Why was the comparison made to the endowments of all other universities rather than to peer university endowments with over a billion dollars? Finally, and most troubling, the comparison is based on YU’s “long term investment pool”, which in President Joel’s words, “includes the endowment”, but apparently includes other things as well. What are they? And why didn’t President Joel just offer a simple apples-to-apples comparison between YU’s endowment and other peer endowments? The answer, not surprisingly, is because that simpler and more honest comparison would have told a very negative story: according to the NACUBO Endowment Study used by President Joel, in 2005-2013, YU’s peer endowments grew by a compound annual growth rate of 5.6% while YU’s endowment grew by only 0.37%. That’s less than the inflation rate over this period.

President Joel’s attempt to reframe the discussion as a comparison of returns is also fundamentally mistaken because the proper benchmark for a portfolio’s performance is not its nominal return but rather its “risk-adjusted” return. Riskier portfolios often produce higher results to compensate for their higher risk profile — but does that mean that YU should invest its entire nest egg in a high-risk portfolio? Ultimately, that’s the question — not a comparison of nominal returns – that needs to be addressed when examining whether YU’s leadership was reckless with its endowment money. And President Joel’s response speaks to only one small aspect of YU’s financial performance discussed in the article; he does not address, for example, YU’s massive operating deficits which, according to Moody’s, may cause YU to run out of cash next year.

We have indeed fallen very far when the President of YU responds to an article claimed to contain “half truths and inaccuracies” with his own half truths and inaccuracies. But it did not have to be this way. President Joel could instead have offered a full accounting to the community of the decisions that were made and why … He could have openly acknowledged such mistakes as were made, the lessons learned, the corrective steps being undertaken. He could have laid out a roadmap for YU’s recovery. Like the [initial] article, he could have offered facts and figures. And he could have said, “I recognize that I will have to ask our staff, students and supporters to make painful sacrifices, in part due to decisions that I helped make. Therefore, I am tearing up my employment contract, which under the current circumstances is inappropriate, and will continue to serve as President only for as long as the board wants me and with compensation that is determined by the board to be commensurate with my efforts and accomplishments.”

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A comment on the Failed Messiah blog:

[D]oes he take us for fools? If there’s no problem, why has Moody’s steadily downgraded their debt and issued warnings? Why is YU frantically selling off many apartment buildings? Why no mention of the approx. $400M in deficits over the last 5 years?

“There was and always will be pressure for winning teams from boosters whose identity, pride, and manhood are at stake…”

Yes, it’s all guys; and this moving eulogy to what used to be a university ponders the grotesquerie of universities as settings for the ongoing drama of one’s struggle to be a man. John Shelton Reed’s opinion piece makes the point that the University of North Carolina Chapel Hill used to be a good school until a group of rich men with their manhood at stake began to stick their dicks in it.

Other famous dick-stickers are Oklahoma State’s T. Boone Pickens (the entire university lolls open to Pickens; his dicksticking into the hedge fund and death payout markets really fucked the place up, but no one cares) and the University of Oregon’s Phil Knight, who has ginned up his new pleasure palace for UO football players with huge lettered signs saying things like EAT YOUR ENEMIES.

Famed Penn State had, of course, multiple and varied dick-stickers.

If the only university arena for at-stake manhood were athletics, it would be bad enough; but as ol’ T. Boone’s hedge fund maneuver demonstrates, sports programs already rife with financial, sexual, and academic perversion are only part one. Like “Big Stones” Larry Summers, who lost Harvard over a billion dollars on interest rate swaps (“No one had the stones to stand up to Summers when it came to this high-risk strategy of essentially borrowing at Treasury rates and investing the proceeds in an illiquid long-term endowment…”), T. Boone out-balled all voices of reason at Oklahoma State and lost the school an unimaginable fortune.

Yet Harvard is so rich, long hot Larry barely made it break a sweat. Ditto for T. Boone. Bouncy bouncy. Big deal.

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Now, soon-to-be-ex-universities like Yeshiva – that’s another matter. It does matter there, because – unless at the last minute Big Berries Rennert decides to give the place a couple of billion dollars – that school is permanently post-coital. (One of the characters in Henry Miller’s Tropic of Cancer says to his lover, “I am fucking you, Tania, so that you’ll stay fucked.” Insert Yeshiva in place of Tania.) Its trustees – trying to compensate for their loss of testosterone when sooooooper-macho fellow trustee Bernie Madoff went to prison – hedge funded away money Yeshiva didn’t, couldn’t, and wouldn’t ever have.

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University Diaries thinks it’s time to open the chemical castration conversation.

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Update: At-stake manhood strikes again:

Polish anxieties about who’s blowing who and who’s got the biggest dick are apparently going to bring down the government.

“We are running out of money, and there are very painful cuts ahead of us that will go to the muscle of Yeshiva if we are not careful. Denying the terrible mismanagement of the endowment over the last decade, and the errors the University made (that other similar institutions did not make) in response to the Great Recession increases the likelihood that we will never learn our financial lesson. It is not about the Madoff fraud or the Merkin scandal, rather the whole structure does not work and no real information is shared about why.”

As international attention pivots to scandalous, junk-status Yeshiva University, UD wants to acknowledge those people – like Andrew Sole – whose concern for the institution as a university rather than a tit for hedgies on the board of trustees prompted them to act on behalf of YU. She wants to acknowledge the three faculty members who, in 2012, wrote an anonymous letter to the campus newspaper (anonymity being required in the corrupt setting of this rapidly dissolving university) voicing their despair at the baffling failure of the university’s endowment — baffling because the cronies on the board of trustees who were high-risk-betting all of the university’s money away were far too arrogant to tell anyone about it. Why weren’t there conflict rules? Why wasn’t someone supervising the trustees and the money managers? Does it bother anyone that, with the exception of storied Yeshiva trustees Bernard Madoff and Ezra Merkin, pretty much the same people whose staggering financial irresponsibility destroyed the school are still on the board?

There’s a pathos, two years later, to reading these faculty members trying to figure out what’s going on:

No one is speaking about what caused the terrible drain on the endowment and when it will stop. In short, there is no transparency… Yeshiva needs to figure out why the endowment is performing so much poorer than the endowment of every other comparable institution in the nation and fix that problem. We do not know what the problem is or how to fix it – but we see that no one else is discussing what really is the problem, in part because of the utter lack of transparency in YU’s finances.

Well, that’s over. Now the whole world is watching as the story of how a school destroys itself through greed, secrecy, and cronyism, plays out in the national and international press. As the Yeshiva University story escalates, this blog will continue to note the people who warned the school that it was killing itself.

“The consequences of the Board’s apparent inattention may very well prove to be catastrophic to this distinguished educational institution, and the questions raised may need to be answered by an independent investigation, perhaps by the NYS Attorney General.”

Six years ago, a concerned Yeshiva University alum, Andrew Sole, wrote a letter to the president of that school calling for the resignation of the entire board of trustees, a scandalous, conflict-of-interest-ridden, Madoff-and-Merkin-led, lot.

Yeshiva’s answer to Sole (which came not, of course, from the president, who is far too busy and important to have bothered with such a triviality, but from some underling… or maybe the response was machine-generated…), Sole told a newspaper, was “scripted,” and “beyond offensive.”

And so it remains today, with Yeshiva the object of renewed contempt as stunning details of its take-down of itself via a combination of risky investments and the Madoff/Merkin tag team emerge. Sole once again calls attention to the fundamental negligence… perhaps amounting to criminality?… of the people who have now succeeded in running the school entirely into the ground (Moody’s has rated it junk); and, incredibly, true to form, Yeshiva has tried not responding at all to him, and then, under pressure from growing media attention, has denied everything. Everything’s peachy at Yeshiva! Plus the extensive report on its shameful activities is all “half-truths and inaccuracies.” Such as?

Yeshiva isn’t saying.

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Yeshiva has had to sell off some of its valuable Manhattan real estate, is trying to pare faculty by encouraging retirements, and has given up control of its Albert Einstein College of Medicine to save money. Yet it’s still at risk of running out of cash next year, Moody’s reported.

Getting rid of everyone but beloved Yeshiva trustee Zygi Wilf!

“Wilson, just before the meeting adjourned, complained that board members often have not been given enough information about potentially negative aspects of university operations.”

Wow, finally things get SO bad at the University of Louisville that a trustee squawks. UL is one of the very worst universities this blog has chronicled over the last few years. (See my University of Louisville posts here.) It’s sort of got everything wrong with it: gross-out athletics, of course; but mismanagement, employee crime, Medicare fraud, low graduation rates, Bobby Petrino, Marius Ratajczak, Robert Felner, outrageous dean turnover, medical school on probation, strangely generous separation agreements…

PLUS, it turns out

The University of Louisville’s program to provide continuing medical education for doctors has been placed on probation by its accrediting body less than two months after a different agency put UofL’s medical school on notice.

I say it turns out because the complaining trustee, who understandably tried to resign from this disgraceful school’s BOT but was basically forced to stay on by the governor of the state (!), said that the last straw was finding out about the latest UL unit to go on probation from the newspapers. Wouldn’t want to tell your trustees what’s going on. Not when it’s this bad. And UD‘s betting that a lot of people have a lot of money invested, as it were, in UL’s continuing to operate as – it seems to her – a kind of quasi-criminal enterprise.

Indeed, there must be a lot of raised eyebrows at UL today. You expect trustees, of all people, to just sit there.

Straus Waltzes.

A trustee subpoenaing his university’s students is kind of bad form; it kind of undermines the whole “university family” meme of which publicists are fond.

Of course we know a university is not a family, strictly speaking; but on the other hand there’s this idea that a university is a community, there’s a certain united feeling and history and commitment there… And that, as in families, certain things aren’t done. It’s a news story when children sue their parents; and it’s totally a news story when, angered by students calling for an investigation of a trustee’s rumored unfair labor practices, the trustee subpoenas their emails, journals, shopping lists…

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There are eight million stories in the Naked City, as they say, and the Daniel Straus saga is only one of them; but in its small way – in a way that interests University Diaries – it’s paradigmatic. Now that Straus is, uh, off the NYU law school board of trustees, it’s worth reviewing the plot elements.

The intriguing problem in regard to choosing trustees is the following:

You’re after the most staggeringly bohemoth moneybag in the world. You’re after the Mothra of money.

Some of America’s most wealthy have acccumulated their wealth in morally and legally questionable ways.

Some of these same people have rather aggressive and even imperious personalities. They were already that way when somewhat unscrupulously, perhaps, accumulating their wealth. Now that everyone treats them like Louis Seizième (pre-guillotine) they are far worse.

If you’re this kind of guy (Platonic ideal: Donald Trump) you customarily sue the shit out of anyone who dares to get in your way, and lookee here. Now it’s two of your charges, two of the law students whose welfare you’ve agreed to oversee, and they’re making noise in various ways about your labor law violations. They seem to think you’re a little soiled to be a trustee.

Unfortunately for you, you are not a Yeshiva University trustee, where being Zygmunt Wilf is not a problem. You do your subpoena, and NYU immediately decides to represent – at no cost – the students. So now you’re in the awkward position of being at very serious odds not just with the students whose welfare you oversee, but with the university that appointed you.

Something’s got to give, and that’s you.

NYU gets bad publicity; you get ridiculed (‘Mr. Straus’s lawyers accuse the union of conspiring with students to “embarrass,” “shame” and “publicly denigrate” him. You might argue that Mr. Straus has done a good job of this on his own.’).

So to repeat: The problem with recruiting trustees (people pay much more attention to the problem with recruiting the best football players, but I’d argue that they’re equally interesting problems) is that… Well, let me quote Fran Lebowitz (UD interviewed her not long ago): “You don’t earn a billion dollars. You steal it.” This is not always an accurate statement, but you get the idea. You can’t be too careful when choosing trustees.

Because it typically takes longer than ten days.

Two Upstate senators say they voted against each incumbent University of South Carolina trustee because of “questionable activities” allowed to occur on two of USC’s campuses.

… [The senators cited] a performance on the campus of the one-woman show, “How to Become a Lesbian in 10 Days.”

“All we are asking for is balance,” [one] said.

‘”It’s unbelievably piggish and outrageous,” Henry says.’

Henry Blodget is talking about University of Southern California trustee John Martin and his… well, Blodget has already tried to supply some adjectives… personal compensation. You sense, in Blodget’s emotional but not entirely polished description of human beings who take several hundred million dollars to themselves in compensation every year a kind of verbal difficulty, an eagerness and yet an inability to capture what it means – socially, morally – for one human being to do this. Piggish is a strong precise sort of word; yet he’s matched it with an abstraction (outrageous) which does little more than amplify his initial abstraction (the condition of being unbelievable). One feels as though the phrase should substitute a more precise word for outrageous… Or maybe the phrase would be stronger if one simply dropped outrageous and ended on piggish.

Anyway. A trustee stands as a role model for students and faculty, and Martin’s cosmic greed (cosmic is good, I think… I don’t know… I’m kind of tongue-tied on this one myself) conveys the highest values of that institution of higher learning. Higher, higher, higher, until you’re pulling in, as Blodget puts it, “700 times my lowest employee.”

‘Eventually, Piketty says, we could see the reëmergence of a world familiar to nineteenth-century Europeans; he cites the novels of Austen and Balzac. In this “patrimonial society,” a small group of wealthy rentiers lives lavishly on the fruits of its inherited wealth, and the rest struggle to keep up.’

What’s the good of majoring in English? Reading Austen will put you on a fast track to understanding the world to come, the world, according to the hottest book out there at the moment, that we are already beginning to see emerge. The concentration of unimaginable wealth in private hands, coupled with remarkable and increasing rates of income inequality, is producing Austenland.

And – to stay with the university for a moment, since it is after all the subject of this blog – we can, relatedly, see emerging … call it The Benefactor Quandary… or call it less formally the Madoff Mess… the Milken Mess… the… Firtash Mess?

Dmitry Firtash is a tragic figure, a harmless well-meaning oligarch caught up in the cruel tides of history. After quietly amassing billions and billions of dollars for himself and his loved ones through massive corruption, he made the mistake of simply being Ukrainian… And here comes the US government after the dude because he’s a friend of the Russkies and we’re pissed with the Russkies! So now he’s been arrested and he’s gonna be extradited to New York or Washington or someplace near UD‘s house so we can make mock of him and take all his money and throw him in jail.

But meanwhile, what interests us here at University Diaries, is this:

A Ukrainian energy tycoon who has made considerable donations to the University of Cambridge has been arrested, with campaigners saying the university must review its ethical investment and donations policy as a result.

Yes, Cambridge fell for Firtash’s oily (if you will) charm and now it’s official knowledge that he’s a crook whereas when they took his many millions in donations it was only privately bruited about that he was a crook.

What to do?

The guy’s been washing his rep via big bucks to Cambridge exactly the way so many somewhat crooked one percenters do at various academic institutions – remember, Steven A. Cohen is still a trustee in good standing of Brown University – and now Cambridge looks like an enabler. This for that – twenty million dollars in exchange for we shed our sweetness and light upon you…

Expect to see more of this as our wealthy rentiers go restlessly in search of legitimacy.

New York University Students: Say Hello…

… to the leadership of your university, the boys of Kappa Beta Phi.

While you’re at campus events listening to administrators intone about diversity and social justice, four of the people who run or have run your school – Fink, Langone, Lipton, and Grassomeet in secret to say what they really think.

Oh, and if you’re a student at the University of Richmond, or Columbia University, or … UD ain’t got time this morning to study the entire membership list (though she will say that any woman who belongs to this club should see a psychiatrist pronto), but there’s a fighting chance a trustee at your university is on it… But anyway for sure if you’re at Columbia or the University of Richmond you have an opportunity to get up close and personal with the leadership of your school…

UD will admit to being fascinated by the… pincer movement by which the contemporary American university is dominated on one side by mindless reactionary jocks and on the other by mindless reactionary vampire squids. No wonder our schools have to hire increasing numbers of earnest high-minded speechmakers – the pressure at either end is killing them. (As longtime readers know, this is UD‘s theory as to why, after Larry Summers, Harvard felt compelled to hire Drew Faust, whose manner is that of Ma Ingalls, to, er, re-rhetoricize the school. UD predicts that Faust’s successor will be Garrison Keillor. It’s getting truly desperate out there.)

The University as the Heart of Darkness

Enter the University of Nevada Las Vegas board of regents warily.

It is as Freud wrote of entering the darkness of the soul:

No one who, like me, conjures up the most evil of those half-tamed demons that inhabit the human beast, and seeks to wrestle with them, can expect to come through the struggle unscathed.

It is as Joyce wrote of the obstetrical theater:

Enter that antechamber of birth where the studious are assembled and note their faces. Nothing, as it seems, there of rash or violent. Quietude of custody, rather, befitting their station in that house, the vigilant watch of shepherds…

The psychoanalyst conjures what is darkest in us; the obstetrician conjures the violence of the birth trauma. Yet both are shepherds, custodians, healers …

The wounded surgeon plies the steel
That questions the distempered part;
Beneath the bleeding hands we feel
The sharp compassion of the healer’s art…

You see the paradox…

And, in some similar sense, to enter that antechamber wherein reside the darkest, most primitive forces of the American university, and then to enter into what Blake called Mental Fight with them, is to emerge scathed. To read – to try to understand – the words and acts of the most primal energies at work in that bastion of enlightenment, the university, is to sense what Marlow must have felt in the forest of shrunken heads.

Let us then in studious quietude listen to them, the trustees of the University of Nevada Las Vegas, as they give a football coach with a 12-37 record a vast raise; as they build for a university community that does not attend football games a vast new football stadium; as they generate a $2.7 million athletics program deficit and make students and taxpayers deal with it… Let us hear their words.

“Maybe we’re being a little generous, but I thought about some of the other factors that were occurring,” Regent Robert Blakely said. “We’re in the process of trying to build a stadium. Having a successful football team is the biggest linchpin. Giving the football coach more of an incentive probably isn’t a bad plan.”

“I’m not enamored with the contract either,” Regent Michael Wixom said. “But I don’t want to jeopardize the momentum (Hauck) has created. [The coach’s most recent season was 7-6!] If we reject the contract, I’m afraid it will do immense harm.”

Regents directed Chancellor Dan Klaich to form a committee to look at best practices in contract negotiations with athletic coaches. However, Regent Allison Stephens said she wanted to see fair-market value and adequate compensation for coaches.

“I just fundamentally disagree that our role in fiscal management means that we have to nickle and dime and negotiate down people working in our institutions,” she said.

Some in the public, who came to support [the coach’s] contract renewal, agreed.

A $200,000 annual salary increase “is peanuts in the long run,” Rich Abajian, general manager for Findlay Toyota’s board of governors, told regents. “Football is the program that can pull you out of budget problems. … You’ve got to pay money to make money.”

It’s official.

UD parses the latest story from the indispensable Todd Wallack…

… of the Boston Globe.

Wallack has way-doggedly gone after greed in academia and environs. When greedy academia and environs snarls back at Wallack with lawyers and public relations, Wallack just keeps going, publishing story after story until the truth is accepted by everyone except those whose livelihood depends on continuing to lie for greedy a&e.

And speaking of greed: Understanding postmodern American levels of greed is key to understanding Wallack’s latest story, about the ex-president of Brandeis University.

People are trying to explain the downfall of Virginia’s governor in terms of the insane disparity between the wealth of his fundraisers (with whom he and his wife hobnobbed) and the wealth of the guv and the missus. These two had to destroy their lives and make Virginia a laughingstock because of their need to keep up not with the Joneses but with people at the level of Jamie Dimon.

And speaking of Dimon, you cannot understand his just-announced 74% raise unless you understand that he operates within the same painful income-inequality-in-America reality. The gap between Bob McDonnell and other millionaires was as unconscionable as the gap between Jamie Dimon and other billionaires. One of these two was able to find justice legally; the other seems to have been driven to a life of crime.

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Ainsi, once you grasp the levels of greed-jockeying we are now, Year 2014, talking about, little in the story of sadly undercompensated Jehuda Reinharz will surprise you.

… Reinharz earned more than $600,000 in 2011 to serve as president emeritus, a part-time advisory role, in addition to receiving $800,000 that year in his new job for a Cleveland philanthropy.

But when you throw everything else in

… Reinharz is expected to collect roughly $8 million from Brandeis after stepping down as president…

Pretty much everyone at the school except the trustees is outraged. Because

… the school has long claimed social justice as one of its core values. Reinharz’s pay also came at a time of rising tuition and as the university was facing steep budget cuts that forced it to slash employee benefits, lay off staff members, and even explore the idea of shutting down a beloved campus museum.

In response to the outrage, Brandeis has graciously decided to

… include a faculty representative on the committee that sets executive pay …

which means that right now they’re racing desperately around the business school looking for the richest b-school professor on the faculty. Only a professor also running a hedge fund can understand executive compensation at these levels.

The Brown University Observer

Like the New York Observer newspaper, Brown University must by now be well-practiced in observing its highest-profile trustee, Steven Cohen, as he tries to avoid going to jail.

… Nick Verbitsky, the director of To Catch a Trader, told [the New York Observer] that the FBI has confirmed they are looking at three other stock trades that Mr. Cohen could personally be charged on.

Yes, it’s quite the cat-and-trustee game. Keep your eye peeled, Brown.

“[W]hat [Steven] Cohen has done at SAC Capital is make a mockery of the fundamental sanctity of the capital markets, yet again raising the question of how and why such a rich and powerful man continues to avoid the prison time he appears to so richly deserve.”

Pish posh. The man is currently the highest-profile trustee of one of this nation’s great universities. How dare you say he deserves prison.

This preview of Frontline’s “To Catch a Trader”…

… (it’s on tomorrow night) features a great photo of Brown University’s most high-profile trustee, Steven Cohen. He’s dressed up as a king who plays golf.

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