Vic Fleischer has a piece in the NYT arguing for a federal law that would require non-profit higher ed institutions to spend at least 8% of their endowments every year (the usual percentage spent is 4% to 4.5%, and it’s often based on several-year average of the endowment principal, so when endowments are going up rapidly, as they have been recently, the actual percentage spent of the current endowment total can be far lower).

This hoarding behavior is especially obnoxious, given where a lot of the money that is spent ends up going:

Who do you think received more cash from Yale’s endowment last year: Yale students, or the private equity fund managers hired to invest the university’s money? It’s not even close. Last year, Yale paid about $480 million to private equity fund managers as compensation — about $137 million in annual management fees, and another $343 million in performance fees, also known as carried interest — to manage about $8 billion, one-third of Yale’s endowment.

I am but a simple country faux-lawyer, largely untutored in the ways of high finance, but this seems like a truly fantastic ripoff of what one of its former presidents called the best finishing school on Long Island Sound. Yale paid six percent of that portion of its endowment managed by the Masters of the Universe to said Masters, for their priceless 480 million dollars-worth of wisdom?

How could whatever marginal investment value the wizards of hedge fundery provided over, say, a dart board, justify this kind of fee structure? The answer is . . . look over there, a new student center!

Kenneth C. Griffin, a hedge fund manager, gave Harvard $150 million in 2014. In May of this year, Stephen A. Schwarzman, the chairman and co-founder of the private equity giant Black-stone, pledged $150 million to Yale toward a new student center. John A. Paulson, another hedge fund manager, topped them both when he gave Harvard $400 million in June. While nobody has suggested that quid pro quos were involved in these cases, these gifts high-light the symbiotic relationship between university endowments and the world of hedge funds and private equity funds.

“Symbiotic” is a polite word, but I can think of another biological metaphor which might more accurately capture the increasingly intimate relationship between elite universities and the .001%.

. . . Howard, in comments: