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Ellen Belcher is the Dayton Daily News opinion pages editor. She writes about state government, education, the environment, higher education and all things Dayton.
Martin Gottlieb is an editorial writer and columnist for the Dayton Daily News opinion pages. He focuses on the political process itself and does such national issues as war, the economy, taxes and Social Security, as well as a hodge-podge of local and state issues.Home > Blogs > A Matter of Opinion > Archives > 2010 > February > 08
Monday, February 8, 2010
Editorial: Bank of America should be thinking settlement
Ohio has a big case pending against Bank of America. Two big state pension plans — for teachers and public employees — are claiming they lost about $85 million after the company bought Merrill Lynch during the financial market’s meltdown in 2008.
The charge is basically that Bank of America hid from its stockholders pertinent facts about Merrill Lynch, facts that sent Bank of America stock tumbling after the purchase. The facts in question were that Merrill Lynch had suffered huge losses and had paid huge executive bonuses.
Last week in New York, Bank of America settled a suit that was basically about the same charges.
That case was brought by the U.S. Securities and Exchange Commission. The company agreed to pay $150 million.
So, more than ever, it is good to see Ohio chasing money it thinks it lost unfairly. Also good to see is a resolution in at least one venue.
There are multiple venues. On the same day as the SEC settlement, New York Attorney General Andrew Cuomo filed a suit against two men who were top Bank of America executives during the purchase.
A few months ago, a judge consolidated cases from Ohio, Texas and Europe and wrapped other claims from all over the country under the court’s authority.
Theoretically, in the consolidated case a court could find against the company for more than $1 billion, making it one of the biggest civil cases ever.
Ohio Attorney General Richard Cordray was put in charge of the plaintiffs’ side, because Ohio is seeking the most money. He picked Dayton lawyer Dennis Lieberman, formerly chairman of the Montgomery County Democratic Party, as “Ohio counsel” in the case.
At this stage, lawyers are still interviewing witnesses and examining documents. In the spring, a judge is expected to rule on the company’s efforts to get the case dismissed.
Bank of America says it is being pursued for political reasons. Clearly, there’s something to that. The politicians sense a chance to do something the public wants. Ultimately, however, the courts and the laws are there to make sure the politicians don’t get carried away.
Consolidating the cases makes sense, in the name of getting the matter resolved and allowing everybody to move on. No point in airing the same charges over and over.
Meanwhile, having the politicians engaged has an upside: they are eager to get the matter resolved, so as to get some headlines about how much money they have won for their states.
Hopefully, Bank of America is moving toward settlement as a general strategy. That would be in everybody’s interest, as opposed to a case that goes on for years, which is always a real possibility in something this complex.
For companies to be held legally accountable for their behavior is entirely appropriate. Stockholders have certain rights. Those rights should be aggressively defended.
But Bank of America needs to move on. Whether or not it’s “too big to fail” — a phrase that has come to grate on American nerves — it certainly is tied in with the lives of many millions of Americans.
The company, the courts and the governments pursuing it need to bend efforts toward a resolution, as well as justice.
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Editorial: Sinclair can be pricier, but still be cheap
If Sinclair Community College were not in a financial bind today, that would be a much bigger problem than even its pressing money concerns.
The fear — panic is too strong a word, but it’s not far off — about the future is attributable to one thing: enrollment, which is exploding.
If students, young and old, weren’t — especially in this economy — flocking to Sinclair, that would be much more unnerving.
That would mean people had given up on bettering themselves or didn’t care to do so; or that they couldn’t afford the school; or that they weren’t satisfied with the courses and training Sinclair offers.
None of those things seems to be in play.
Sinclair’s enrollment has increased by 23.1 percent in the past two years, as measured by full-time equivalent students enrolled in the fall. Its cost of $45 per credit hour (for Montgomery County residents) makes it the lowest-priced community college in the state, a distinction that has value beyond bragging rights.
Sinclair’s price is, far and away, what makes it a place of possibilities for so many.
Sinclair’s board and administrators are tip-toeing around absolute declarations, but some of them, anyway, have concluded that the college must raise tuition over time and back off its commitment to tuition freezes.
At a recent board retreat and at meetings with faculty last week, President Steven Lee Johnson presented facts and figures suggesting Sinclair has no choice but to increase what it charges students.
Yes, the state has been increasing its funding — on account of the uptick in enrollment — but a 5 percent increase in that money in 2009 over 2008, for example, doesn’t cut it when there are 11 percent more students.
Last year the school did get a nice 16 percent bump in property tax revenue on account of its local levy that was passed in 2008. But Sinclair’s entire property tax receipts only represent 20 percent of revenue.
At a meeting with faculty on Thursday. Feb. 4, the comments that had the most heads nodding is that the college is relying too much on part-time instructors and that classes are too large — all a function of money.
One instructor spoke of having 40 students, saying her room was so crowded she couldn’t walk between desks.
Meanwhile, Sinclair, more than some other colleges, is feeling the effect of the message that everyone needs some post-high school education. Not everyone who realizes that reality is ready to do college-level work, and helping those students catch up is expensive.
Then there’s this: The state’s money represented a little less than a third of Sinclair’s revenue in 2009. Not just Sinclair, but every public college in the state is wondering what will happen in two years, when Ohio’s budget isn’t propped up by a ton of stimulus money.
Historically, when money is short, higher education pays the price.
President Johnson is telling his staff that he believes Sinclair can incrementally and significantly raise tuition on a percentage basis without hurting needy students. Many are eligible for generous financial aid, he said. Those who are on the bubble financially will need scholarships that the university has to support, and those who can afford to pay will have to pay more.
While costs have been going through the roof at four-year universities for years, Sinclair has resisted that move. It hasn’t raised tuition in 12 of the last 19 years.
That fact is why many local students who want to attend a four-year college are deciding to take some classes close to home before they start paying the big bucks.
Sinclair is as affordable as it gets. If it can’t be as much of a bargain in the worst of economic times, then the priority has to be making sure that those who can’t pay get exceptional financial help.
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