By Pam Martens: August 15, 2013
New York University, under withering public criticism following media disclosures that it was providing mortgage loans on vacation homes (which it frequently forgave) to elite administrators and faculty, has announced it will limit mortgage loans in the future to primary residences.
In the same announcement, the University said John Sexton, NYU’s President who has received no-confidence votes from five NYU schools, will remain in his position until his current contract expires in 2016.
Wall Street on Parade, the New York Times, and the New York Post have highlighted in multiple articles the lack of financial accountability at NYU. Senator Chuck Grassley took the Congressional lead in the matter when he learned during the Senate confirmation hearing of Jack Lew, President Obama’s nominee for U.S. Treasury Secretary, that NYU had given Lew more than $1 million in loans to buy a home in Riverdale, New York, and then proceeded to forgive a large portion of the loans on a preset schedule. Lew served five years as NYU’s chief operating officer.
Despite repeated requests for information, NYU has stonewalled Senator Grassley on the details of these loans, according to prior statements from his office.
This evening, Senator Grassley released the following statement on NYU’s new policy:
“It’s a no-brainer for NYU to end vacation home loans. In years of looking at tax-exempt organizations, I’ve never seen a perk like that. It flies in the face of the financial interests of the students, taxpayers and donors who fund this university. It’s important to remember that NYU’s ending of vacation home loans should not end scrutiny of NYU. NYU appears to have stopped this practice because of public exposure through the media and the resulting embarrassment. The university still hasn’t disclosed how many such loans there are and what the terms are. The university provides generous loans for select faculty and administrators’ primary homes and hasn’t disclosed details of those loans and their terms in response to my ongoing requests, despite promising to do so. I’ll continue to press NYU for details of its perks for select executives and faculty. The ending of vacation home loans might be the tip of the iceberg of changes NYU needs to make to bring itself into an era of accountability. Also, NYU has said it provided my office with publicly available documents about its loans to staff. That is not the case.”