The Mudcat Café TM
Thread #123728 Message #2728120
Posted By: Rapparee
21-Sep-09 - 12:59 PM
Thread Name: BS: Another Power Grab: Student Loans
Subject: RE: BS: Another Power Grab: Student Loans
Freddie Mac (Federal Mortgage Assurance Corporation) has had a few problems in the very recent past.
Sallie Mae (NYSE: SLM) has had a few as well. This list (from Wikipedia) is not current:
On November 9, 2005, former Sallie Mae employee Michael Zahara filed a federal lawsuit against the company, alleging that it had a pattern and practice of granting forbearance in a purposeful effort to increase total student loan debt. That lawsuit is still ongoing.[9] On October 29, 2008, permission was granted to his legal counsel to withdraw from the case, citing "From counsel's perspective, a breakdown in trust has resulted from the discovery that Relator has been arrested for extortion, the circumstances surrounding that arrest, and Relator's failure to disclose the arrest to counsel."[10][11]
A 60 Minutes segment (originally aired May 7, 2006) examined Sallie Mae, including its business practices.[5] A professor of law at Harvard Law School, Elizabeth Warren, who is also an expert on bankruptcy and an outspoken critic of consumer lenders, questions Sallie Mae's dual role as both lender and collector.[12]
In February, 2007, New York Attorney General Andrew Cuomo launched an investigation into alleged deceptive lending practices by student loan providers, including The College Board, EduCap, Nelnet, Citibank, and Sallie Mae.[6] On April 11, 2007, Cuomo ended his investigation of Sallie Mae and announced that Sallie Mae had voluntarily agreed to change its lending standards to satisfy a new code of conduct for student loan practices established by Cuomo, and to donate $2 million (USD) to a fund devoted to educating college-bound students about their loan options.[13]
On October 10, 2007, documents surfaced showing that Sallie Mae was attempting to use the Freedom of Information Act to force colleges to turn over students' personal information.[14] The university involved, the State University of New York system, is expected to decline the request and be forced to defend its position in court.
In December 2007, a class action lawsuit was brought against Sallie Mae, alleging that the company discriminates against African American and Hispanic private student loan applicants by charging them high interest rates and fees. The lawsuit also alleges that Sallie Mae fails to properly disclose private student loan terms to unsuspecting students. The lawsuit is pending in a Connecticut Federal Court.[15] New York Attorney General, Andrew Cuomo, raised similar concerns about possible student loan redlining in June 2007. [16]
On December 19, 2007, Chairman Al Lord acted out in frustration during an earnings call with analysts, he ended the call with "There are no more questions. Let's get the fuck out of here." Sallie Mae's stock price fell 21% that day.[17]