It’s been a rough few weeks for the central administration at New York University.
Last Friday, the faculty of NYU’s School of Arts and Sciences voted to support a statement of no confidence in President John Sexton and his administration. In the weeks surrounding the votepress attention (including this cover story from the Voice and the New York Times‘s uncomfortable interview with Sexton) focused on discontent at the university over its aggressive expansion plans, both globally and in New York. Meanwhile, the lawsuit over the university’s New York expansion plan held its first hearing, with the judge siding with NYU’s opponents on a potentially important procedural motion.
But there’s another headache facing Sexton and his administration, and it comes from an unlikely quarter: the United States Congress. When President Obama nominated Jack Lew to be his new Treasury Secretary, it put a spotlight on Lew’s previous tenure as an executive vice president at NYU, and the details that came to light weren’t exactly flattering.
For one thing, one of Lew’s primary accomplishments at NYU was in breaking the graduate student union — not necessarily an encouraging qualification for a Treasury Secretary. For another thing, shortly after Lew left NYU to work at Citigroup in 2006, Citigroup and NYU paid millions of dollars to settle an investigation by the Attorney General that uncovered a slimy deal between the two, whereby NYU designated Citigroup a “preferred lender” for student loans while Citigroup kicked a share of the profits from those loans back to the university. The deal was put together while Lew was at NYU. Did he have anything to do with it? His answer in congressional testimony was suspiciously qualified:
“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.”
Then there were the revelations about Lew’s outsize compensation from NYU, including a $2 million in generously structured loans and a $685,000 severance package.
Lew was ultimately confirmed as Treasury Secretary, but one of the chief opponents to his nomination, Senator Chuck Grassley, is still interested in his ties to NYU. Grassley is particularly disturbed by the idea that NYU might be unreasonably enriching its top administrators while maintaining tax-exempt status, he wrote in a letter to Sexton on Friday.
“During the confirmation of Jack Lew, I became aware that New York University (NYU awarded Mr. Lew subsidized mortgages and gave Mr. Lew a $685,000 severance payment when he took a higher paying private sector job with Citigroup,” Grassley writes. “This led me to examine more closely whether NYU uses its tax-exempt status primarily to benefit its students or to compensate university administrators.”
Grassley then asks Sexton some pointed questions, and requests that he turn over a wide variety of documents, including all the university’s loan documents since 2000, board meeting minutes in which loans for NYU executives were discussed, and records of signing bonuses and severance packages over $100,000. The senator wants answers by March 29th.
As a Republican, Grassley is in the minority, and without the power to issue subpoenas, so Sexton doesn’t legally have to answer. On the other hand, pissing off a Senator isn’t something he’s likely to do lightly. NYU is rumored to be shopping around for a Washington legal firm that specializes in negotiating congressional inquiries, and may try to negotiate over which questions it answers and whether those answers will be made public.
Here’s Grassley’s letter: