In one gamble that failed in 2008, the Board of Trustees of American University lost an amount equal to about a quarter of the American University’s endowment at the time.<\/p>\n
Did they inform the students? No. Did they tell the faculty? No. Did they tell the tuition paying and loan borrowing parents? No. AU\u00a0 lost $91 million in a bet on interest rates and still faces additional losses of $76 million according to a report from the Roosevelt Institute and AU’s financial documents. The bet is technically a credit swap agreement with a bank, or a bet on the direction of interest rates. AU bet interest rates would rise; rates have stayed low for years.\u00a0 As the Roosevelt Institute report below shows, AU was at the mercy of the bankers on its own Board of Trustees:<\/p>\n
“American is also a good example of the powerful role that bankers often play at colleges and universities. Several members of the finance industry sit on American\u2019s board, including high-level people at Goldman Sachs and
\nJPMorgan Chase. Some of these same financial companies are involved in American\u2019s swap deals, as bond underwriters and\/or swap counterparties.
\nFor example, a high-level executive at Bank of America sat on the
\nboard during the period that American entered into its two toxic swaps with Bank of America.” (see page 18 and page 23.)<\/p>\n
Did University administrators talk about new financial safeguards in an email to students, parents and faculty? No. Did they institute new financial safeguards so a similar loss would never happen again? No. Or did administrators cover it up? Yes.<\/p>\n