Sen. Chuck Grassley Demands Sexton Answer Questions About Shady Loans And Jack Lew

Newly confirmed Treasury Secretary Jack Lew faced weak opposition to his appointment this February, even though questions were raised about a $1.4 million home loan he received from NYU while he served as the University’s Executive Vice President of Operations from 2001-2006. Two weeks ago, NYU Local released an email sent to faculty from Martin Dorph, NYU’s executive vice president for finance and information, that revealed NYU and its law school currently have outstanding loans to 168 people, for a total of $72 million in loans.

We previously reported that seven of these 168 loans were given to top administrators. These seven loans average over $1 million dollars each and make up 10% of the total funds.

This fact has now been highlighted by Iowa Senator Chuck Grassley in a letter to John Sexton (embedded below) that questions the validity of NYU’s tax-exempt status and the University’s methods of providing loans to members of its faculty. But at the heart of the matter is Lew, of course.

Grassley wants to know more about the terms of Lew’s big loan, much of which was forgiven by NYU, and what Lew’s involvement was with NYU’s preferential loan treatment to Citigroup. During Lew’s tenure, NYU made Citigroup a preferred lender to students, even though the bank did not give the best rates to students. NYU was later exposed to be moving Citigroup loans for cash and other encouragements. Jack Lew became the COO of Citigroup after leaving NYU in 2006 with a severance bonus of $685,000.

Grassley was a fierce opponent of Lew throughout the Senate’s confirmation hearing. When Grassley pressed him on his involvement in the Citigroup scandal, Lew was ambigous at best:

“I do not recall having any conversations with Citigroup officials regarding Citigroup’s selection or actions as a preferred lender for N.Y.U. students. Also, I do not believe that I approved the selection of Citigroup as a preferred lender for N.Y.U. students.”

In Grassley’s statement on the Senate floor before Lew’s confirmation, he warned his fellow members of Congress that they do “not have answers to basic factual questions about Mr. Lew.” A portion of Grassley’s speech was spent discussing Lew’s questionable offshore investments in the Cayman Islands. During his testimony, Lew said that at the time, he didn’t know that the fund he invested in was based in the Cayman Islands and that he lost money in that investment, so he didn’t owe any taxes on it.

Even with Grassley’s objections, Lew was confirmed 71-26, with all 26 “no” votes coming from Republicans.

Grassley has now penned this letter to NYU President John Sexton (below), less than a month after the Senate’s vote. Grassley calls out NYU’s lack of transparency on these secretive loans and ends the letter with a mix of 17 pointed questions and demands. They include requests for “all loan documents for loans made to individuals from 2000 to the present,” a “list of all of loans that have a 0% interest rate,” and “details of all severance payments of $100,000 or more made from 2000 to the present.”

NYU’s Vice President of Public Affairs John Beckman told the New York Post that “We will be reviewing Sen. Grassley’s letter and will respond to it.”

Grassley NYU Letter by nicholasjpinto

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    9 Comments

  1. Sean P. says

    This article fails to mention that Grassley himself is a Republican who might have something to gain politically by making the Democrat-approved Lew look bad. To what extent is Grassley’s probe a partisian attack from the right against the left?

  2. Alec S says

    Sean, the reverse argument could also be made: to what extent would Democrats overlook these issues in order to stay in line with party politics?

    Assessing Grassley’s intent for bringing up these objections, I think, overlooks the core issues being discussed. NYU will respond and based on their response in conjunction with Lew’s argument, we should be able to assess which side holds more merit – or, which side holds the students’/ avg. citizens’ best interest. In short, saying Grassley’s argument is not valid because he’s a Republican only functions an ad hominem without really adding to the debate.

  3. Sean P. says

    You’re absolutely right, Alec. My argument was just an ad hominem. While I am personally still suspicious of Grassley’s motivations, it really is best to wait and assess once more details are revealed. Sorry for adding to the noise and not the debate.

  4. Egle makaraite says

    With all of these news recently, including the board of trustees keeping sexton after the no confidence vote, I just don’t think that nyu’s topmost administrators could give less of a fuck about its students. I was talking to a shanghai professor today about the expansion and she said that she doesn’t understand why some of the people who were hired on for this project are in Asia at all… It just seems to me that nyu operates more as a business than a place of public service, and we the students are getting ripped off… Wish I’d known all this before I started attending this school.

  5. Thunker Gate says

    Did Sexton really forgive those loans or was it Citigroup as a bribe for stiffing the NYU students. I don’t think the public has enough information. It doesn’t make sense for him to have made more than Sexton. Why is the person who has a blank check to the Treasury even accepting questionable loans? I believe he should give it back to the NYU students or the tax payers.

  6. Lena X says

    But the real question is…what did NYU corp/Sexton say in response? It’s April 1 now, the response was due a few days ago, but NYU Local and Google searches yield no further information.

  7. says

    I was in the midst of considering whether or not to borrow $60,000 and return to NYU next year when I heard about these ridiculous salaries. Although outrageous, these huge number on their own were not enough to make the decision for me. When I found out that yesterday that one of my professors has been teaching here for 20 years and still only makes $58,000 a year BEFORE taxes I nearly went to John Sexton’s house and slapped him. If my $59,000 year is not enough to allow my professors to live a decent middle class existence then I will not be borrowing any more money to return here next fall. I do no support this shit.