Universities' Endowment Funds and the Federal Government
Laws such as those being proposed give our legislature the bad name that it has. Why a private, non-profit organization such as a university endowment "needs" to be controlled by the federal government eludes me. Don't get me wrong. When I read that elite schools such as Harvard could pay the tuition of their entire student body on just the interest that their endowments earn, I find that reprehensible and a poor reflection of their governance. But that's their problem, not the fed's.
Surely people will make the argument that as tax-exempt organizations, some limitations on their behavior is appropriate. Really? Is the federal government really so much the paragon of efficiency and insight that they should decide where the Red Cross or Harvard should allocate the contributions they collect? Is that what we want?
Likewise, some will point out that many (most?) students receive some federal aid in the form of grants or federally insured student loans and as such, the government has an overriding interest. To me, this just strengthens the position that the fed should get out of higher education completely.
My guess is that such legislation will probably go nowhere (although some provision for more transparent reporting of where endowment money actually goes may pass). I think though, that the real intent of such debate is to put a chill in the minds of fund managers' minds. The mere threat of such laws may well be enough to "influence" behavior. In my opinion such saber rattling is an immoral use of federal power.
Bad law. It's contagious.