NYU: $72 million in Odd Loans, No Confidence Vote from Faculty

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For
John Sexton, president of New York University, March came in a like a
lion.  In one aggravating week Sexton
found himself the subject of two biting stories in the press: a no-confidence
vote from faculty and focus on $72 million in unexplained  NYU loans to Jack Lew and many others.  The first was merely embarrassing.  The second could endanger Sexton’s powerhouse
position at NYU.

Ironically,
Sexton and his university may be victims of their own success.  For decades NYU has steadily enlarged its huge
footprint, and now plans to add two million more square feet to its campus in
historic (and crowded) Greenwich Village. 
NYU has elbowed aside community protests and even tore down a house
where Edgar Allen Poe once lived, despite loud objections from many of its own
faculty.

One of
the main complaints of last week’s faculty vote of no-confidence in Sexton is
that he places financial objectives ahead of academic pursuits, while limiting
faculty participation in shaping the university’s future.  Sexton,  who earns $1.5 million a year, with a $2.5
million bonus waiting in the wings, has been asked  by Senator Charles Grassley (R-Iowa) to hand
over documents concerning loans and other fringe benefits it paid out over the
last 10 years.  Grassley also wants information
on the university’s generous compensation packages and details on how they were
calculated.

NYU
showed up on Grassley’s radar last month during Senate confirmation hearings
for Jack Lew, a former NYU employee who is now serving as Secretary of the
Treasury.  Grassley zeroed in on why Lew received
a $1.4 million loan from NYU in addition to an $800,000 salary for his
executive job, which ended in 2006. In a letter to Sexton, Grassley wrote, “NYU
appears to have given Mr. Lew an unusual array of benefits in an unusually
opaque way.  So the actual value of his
total compensation package is difficult to ascertain precisely.” Also difficult
to ascertain is why New York University is apparently functioning as a de facto
hedge fund.  Recently, NYU executive
Martin Dorph confirmed that 168 people have received loans from the university
totaling $72 million.

Where
does this largesse come from?  As the
largest employer in New York City, the university has immense political
influence on the local, state and – thanks to our new Treasury Secretary Jack
Lew – national scenes.  NYU’s $3 billion annual
budget gives it economic impact, as well.  

NYU’s
clout buys it a place on the “A” list. 
Its students, however, have to struggle for their “A’s”.  Those who live on campus pay about $70,000
per annum for the privilege of attending NYU.  Many borrow heavily to pay for their
educations.  They will owe money for
years to come.  John Sexton, Jack Lew and
New York University owe them some answers. 
____________________________________________________________________ 

(Photo: NYU President John Sexton. Credit: NYU.)

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Diane Whelton

Diane Whelton lives in New York.

6 thoughts on “NYU: $72 million in Odd Loans, No Confidence Vote from Faculty

  1. New York University has been amazingly successful over the past 20 years, both in general reputation and in improving academically. You can’t criticize NYU for having a large budget and paying its employees a lot— you have to ask whether they *overpay* their employees. If Jack Lew was bringing in three million dollars a year, paying him a salary of $800,000/year is underpaying him, not overpaying him.

  2. Handing out loans, isn’t that something a bank does in this country? Can non-profits be banks? Maybe the nice IRS can take a look into this new-fangled NYU banking thingy, and see if they can straighten out this mess — we wouldn’t want NYU to lose their tax-exempt status.

  3. This is a prime example of why universities should be privatized. The taxpayers and students who actually forked over the money for these shenanigans are the ones left holding the bag, and it looks like it’s full of poo.

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