Outrage Du Jour - Sallie Mae Lobbies Against Student Loan Reform

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The Outrage Du Jour is Sallie Mae spent $4 million dollars, U.S. taxpayer dollars to lobby against student loan reform.

This call out is coming from the White House and what a right on target to choose.

Sallie Mae had launched an intense lobbying effort to push the Senate's hand, including "sit-downs with lawmakers, town-hall-style meetings and petition drives to plead their case and stay in business." Over the past year, the company spent more than $4 million lobbying Congress, a review of campaign finance records showed. That was the equivalent of $25,000 for every day Congress was in session.

U.S. Education Secretary Duncan:

Sallie Mae executives have paid themselves hundreds of millions of dollars in the last decade while teachers, nurses, and scientists -- the backbone of the new economy -- face crushing debt because of runaway college tuition costs.

Where is this going on? The Senate. Are you surprised?

What we need is to clear out the Senate from all of the corruption. It's just a legislative lobbyists' wet dream.

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Securitization strikes again!

And of course, this outrage is due to all those securitized student loans and the securitized financial instruments generated against them. This was cited, quite correctly and interestingly enough, by student protesters at the University of California a short time ago when they raised their student fees there.

And from a Nomura firm's report on student loans:

In 1996, Congress passed the Student Loan Marketing Association Reorganization Act, which called
for the complete dissolution and privatization of Sallie Mae by September 30, 2008. The Privatization
Act authorized the creation of a state-chartered holding company that could engage in activities
outside of Sallie Mae's restrictive federal charter. "Sallie Mae's shareholders approved a
reorganization that created SLM Corporation, a Delaware-chartered holding company, and Sallie
Mae's GSE became its wholly-owned subsidiary."13

Privatization has allowed Sallie Mae to enter other areas of consumer finance (such as auto loans),
debt collection, and guarantor servicing.

And everything indicates, as evidenced by the problems which ensue, and the lack of any real amortization anymore in American business, generally speaking, and as evidenced by those Sallie Mae execs super-salaries (once upon a time they earned normal government salaries), the securitization is the prime artificial driver in the creation of ever rising artificial market prices.

A bit abstract, but that's what all the data indicates.

Interesting Student Loan ABS chart

From that same Nomura report:


Click for readability

another useful post

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might be to do a huge overview on what real derivatives reform would entail. It's gotten muddled, but you're right, they are out, at all costs, to save "securitization" or packaged up loan securities.

But Sallie Mae gets gov funds in the first place so the Obama administration doing call outs on those organizations who literally are using taxpayer funds to lobby against the national interest is truly "outrage du jour".