"A child's learning is the function more of the characteristics of his classmates than those of the teacher." James Coleman, 1972

Monday, August 06, 2007

Sallie Mae Kingpins Ready to Cash In

With the help of John Boehner's Republican Congress, the scammers who run Sallie Mae turned it into a multi-billion dollar goldmine that was built on the backs of college students who must borrow for an education. Next week these same corruptoids will be voting to cash in all their chips.

If you think that Chairman Al Lord's $280 million in salary over the past 5 years is a little high, then how about a platinum parachute worth $225,920,802. And he's not the only one. Polo ponies all around. Inside Higher Ed has the list:

When the directors of Sallie Mae meet next week to consider a $25 billion offer to buy the student loan giant, they will be voting on a transaction that will benefit the company, and also themselves — significantly.

A proxy filing by Sallie Mae with the Securities and Exchange Commission last month shows that the company’s directors will earn a total of about $370 million in profit if the sale of Sallie Mae to J.C. Flowers, Friedman Fleischer & Lowe, Bank of America and JPMorgan Chase goes through on August 15. The bulk of that money — almost $225 million — will go to Sallie Mae’s chairman and former CEO, Albert L. Lord. (A list of the directors and the value of their shares appears below.)

But some current and former higher education officials on the board will benefit handsomely as well, and to some observers, the significant sums going to Sallie Mae directors are symptomatic of larger questions raised by the sale of the mammoth lender, which had its roots as a quasi-governmental entity. Is it appropriate for a company that was built to a large extent through its connection to the federal government to profit so enormously as it has slowly shed those ties?

“Sallie Mae was built to serve a public purpose, of providing student loans,” said Robert Shireman, executive director of the Project on Student Debt and a longtime observer of the student loan programs. “It was set free and no one really knew whether the federal government got a good deal or not. This level of profiteering off the corporation suggests that ultimately the deal that was struck may well have undercompensated taxpayers.”

While the funds going to the company’s directors and officers are a tiny portion of the money that will flow to Sallie Mae and its share holders, Shireman said, “those figures are indicative of the nature of the deal that was struck.” . . .

Background here and here and here.

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