"ITT Educational Services (ESI -2.2%) believes that the CFPB's complaint should never have been filed. The complaint overwhelmingly focuses on issues that are unrelated to consumer finance, and attempts to cast a negative light on aspects of ITT Tech's activities that are extensively regulated by other government agencies."
The core of the CFPB's claims concern just six months of loans, but the bureau knows, says ITT, independent parties provided those loans and the programs ended years ago. "Significantly, ITT Tech did not make any money, in interest or fees, from those third-party programs, which were designed to help students during the recent economic downturn."
"Much of the complaint relies on 'mystery shoppers,' a program that ITT Tech itself voluntarily uses to make sure its policies are being followed by its employees, and to help ensure that errors in implementation are caught and corrected."
"The complaint is an aggressive attempt by the Bureau, recently created by the Dodd-Frank Act, to extend its jurisdiction into matters well beyond consumer finance. It is unjustified as a matter of law and mistaken as a matter of fact."
That's the point, says Herb Greenberg. "It creates a roadmap ... other for profits should shudder."
Previous coverage of CFPB suit