I’ve written about the Yale Corporation a number of times. I’ve called its members “craven,” “secretive,” “autocratic,” “out of touch,” “unconnected” and on and on. Clearly I am not a fan of the Corporation.
There are 19 members of the Corporation, including 10 successor trustees (who choose their own successors), six alumni fellows (elected by the alumni), the president of Yale and the governor and lieutenant governor of Connecticut (these two are ex officio members).
In broad strokes, Corporation members are not people who have spent their lives in education; some have, but most Corporation members come from the boardroom, not the classroom. They are CEOs, chairpersons and board members.
Take Joshua Bekenstein ’80. Bekenstein is the managing director of Bain Capital, a company he has been at since its founding in 1984; he’s been managing director since 1986. Bain Capital is a company whose business model involves buying struggling companies (with good cash flows) and forcing them (and not Bain Capital) to take on huge amounts of debt. Using the borrowed money, Bain Capital buys controlling stakes in the struggling companies, but the companies still have to pay off the debt. At this point, according to a Rolling Stone cover story by journalist Matt Taibbi, a given company either “can fire workers and slash benefits to pay off all its new [debt]…[o]r it can go bankrupt…Either way, Bain wins.”
In recent years, firms like Bain Capital have begun paying themselves massive “special dividends” from the borrowed money — dividends that have “created no economic value,” in the words of New Yorker staff writer James Surowiecki. This is how Bekenstein earns his paychecks.
But let’s consider a few other Corporation members. Anyone interested in divestment from fossil fuel companies might be interested to know that two Corporation members have or recently had direct financial ties to the fossil fuel industry.
As I’ve written before, Charles Goodyear ’80 spent four years as the CEO of BHP Billiton, a company that extracts and sells fossil fuels. He is a member of the National Petroleum Council and was, until recently, a board member of Anadarko, one of the world’s largest fossil fuel companies. (Interestingly, Goodyear recently resigned from Anadarko’s board.)
Paul Joskow GRD ’72 was for years the director of TransCanada, the oil and natural gas company behind the Keystone XL Pipeline. Joskow now sits on the board of Exelon, an energy company with holdings in fossil fuels.
A particularly interesting — and troubling — Corporation member is Gina Raimondo LAW ’98. Raimondo is the recently elected Democratic governor of Rhode Island, but, on fiscal issues, she’s startlingly conservative. As Rhode Island state treasurer, Raimondo raised the retirement age from 62 to 67 and suspended cost-of-living increases for retirees. Then, she began investing the state pension fund in Wall Street firms. According to The New York Times, under Raimondo, “The Rhode Island pension system has ramped up its investments in hedge funds, private equity and venture capital from zero to almost $2 billion, or more than one-quarter of its assets under management.” And the strategy didn’t even work: Under Raimondo, Rhode Island lost $372 million because of the high fees paid to the firms and the firms’ sub-par performance. This is the fiscal policy of one of the people steering Yale’s billions.
Some Corporation members even exhibited questionable tendencies when they were students at Yale. According to a 2008 New York Magazine profile, when Corporation member (and current Time Warner CEO) Jeffrey Bewkes ’74 was at Yale, one wealthy classmate expressed a belief that “expropriating the ill-gotten gains of evil corporations on behalf of the masses” would be a good idea; Bewkes disagreed, and “not quite accurately” played down his own wealth. Meanwhile, another classmate recalled, “Jeff was always being groomed to be a CEO.”
Why does all this matter? Well, the Corporation makes so many of the University’s major fiscal decisions — from the question of divestment to how much tuition increases. And its members do so in secret, with literally no oversight. With that in mind, a number of their recent decisions can be explained by the fact that many Corporation members — and there are others I didn’t mention, such as the former CEO of J.P. Morgan — have backgrounds in companies that I believe hurt the poor; have holdings in companies that hurt the environment in exchange for profits; and apparently believe in ideologies that are contrary to efforts to check income inequality. This is why they increase our tuition even when Yale’s endowment grows by billions. This is why they refuse to divest. These individuals don’t know how to run a non-profit like Yale. It’s hard to see clearly with dollar signs in your eyes.
Scott Stern is a senior in Branford College. His column runs on Mondays. Contact him at firstname.lastname@example.org .