BY BAYLE HOUTE
Treasury Secretary Timothy Geithner announced on Wednesday that the investment assets of Harvard University had been seized in order to restore stability to the global financial system. Treasury officials reported that the total amount taken under federal control was just over $30 billion despite losses which accrued to the Harvard endowment during the ongoing financial crisis. In exchange for the seized assets, the Treasury has issued 10-year Treasury Bonds to the University maturing at a value of $36.57 billion in 2019, an annual interest rate of two percent. To magnify the benefit created by the seizure, the Fed has structured the transaction, through fractional reserve banking, to leverage the assets into over $3 trillion in bonds for sale to foreign governments that are holding U.S. dollars in reserve. “Since these bonds are backed by the Harvard name, the Chinese are going to be clamoring to reinvest their money in the United States,” said Fed Chairman Ben Bernanke. Members of the G20 expressed relief at the news of a concrete plan to support the value of the U.S. dollar.
Harvard President Drew Gilpin Faust expressed deep concern about the news, and warned that it will likely necessitate further staff layoffs and tuition hikes. “Professors and students will have to come to terms with the fact that there is no such thing as a free lunch. The loss of endowment dividends, which contributed almost thirty-four percent of our annual budget, will force us to scale back our generous extra-curricular dining opportunities, which are currently consuming almost a quarter of the University’s gross annual revenues. In addition, we will most likely be unable to continue expansion of innovative departments like sub-Saharan social anthropology and nanophotonic synthetic bioengineering. Nonetheless, she admitted that, “Given the curren economic gloom, the rate of return on these illiquid bonds will probably be much better than any other investment during the next decade.”
President Obama praised Treasury Secretary Geithner’s plan. “This venerable institution of scholarship, much like the troubled financial and automotive firms, is simply too big to fail. It is for this reason that we are confident this plan is in the best interests of the American taxpayers and the stability of the world economy.” The Dow Jones Industrial average was up 372 points, or 6% on the announcement. Former Harvard University President Larry Summers was credited with having crafted the plan to prop up the faltering Treasury. “With the bravado emanating from the Chinese putting the stability of the dollar in question and Peter Schiff detailing the inevitability of a currency crisis on YouTube, it was unavoidable that we make some immediate announcement to reestablish the security and stability of Treasury Bonds. The real danger was that our intervention would be too small or too slow.”
President Obama saluted the patriotism displayed by Drew Gilpin Faust in her graceful acceptance of the U.S. Government’s plan. “Harvard’s President has shown us that we are all going to have to make certain changes in order to make a real commitment to responsibility and reaffirm the enduring promise of America.” Faust, for her part, was somewhat skeptical as to the University’s ability to oppose the government’s actions. “Last week, Carl M. Loeb University Professor Laurence Tribe wrote an op-ed in the Wall Street Journal saying that this sort of asset seizure would probably be constitutional even if subject to strict scrutiny under the Fourteenth Amendment. That statement has put the kibosh on any litigation we might have pursued.”
Acting Dean Howell Jackson assured HLS students that the University’s changing financial circumstances would in no way affect the law school’s public service initiative or summer public interest funding. “Our legendary fundraising machine has been hard at work this year, and has already raised over $100 million, which will go to extending protection for LIPP, SPIF, JIFFY, PEP, and all our other public interest programs.” He also noted that, although there would be some belt-tightening in the funding for student activities, HLS students will continue to enjoy some of their traditional perks. “We will be continuing to provide morning coffee three days a week, but on Tuesdays and Thursdays we will have to switch to Sanka.”