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Study suggests elite colleges contributed to financial collapse

May 21, 2010

A study of six New England colleges faults risky investment strategies for hastening the financial meltdown of 2008. The study cites endowment managers’ increasing use of private equity, hedge funds and commodities like oil and gas to generate big short term gains at the expense of long-term stability. The authors also point to  a ripple effect from budget and staffing cutbacks as institutions seek to recover from endowment losses. The authors say this has contributed to the longevity of the economic downturn.

The study by the Tellus Institute in Boston looked specifically at Boston College, Boston University, Brandeis University, Dartmouth College, Harvard University and the Massachusetts Institute of Technology. It questions the influence of Wall Street on those institutions’ boards, something students at Brown University have also raised questions about. Brown President Ruth Simmons faced criticism recently for serving on the board of the financial firm Goldman Sachs.

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