Tuesday, September 21, 2010

Scrutinizing Sallie Mae Through A Regulatory Lens

I got my boxing gloves on! That means I'll fight fair . . . naturally . . .

Since I have decided to dedicate my life's work to researching and solving the student lending crisis, as well as helping the indentured educated class, I'd do anything to serve you as a public servant. That's why I would like to be a part of this new agency, so that I could assist in scrutinizing Sallie Mae and other student lenders within the context of potential regulation violations. Indeed, much of my work has been devoted to discussing the way in which these lenders have defrauded borrowers.

Let's make Uncle Sam's arms strong again, so he can actually help U.S. citizens.


Anonymous said...

Geithner gutted this agency by maginalizing Elizabeth Werner.

Nando said...

Cryn, I received an email from a TTTTouro Law grad who owes $271,928.81 @ 8.25% interest. By my calculations, if he makes the minimum monthly payment, i.e. $2,042.90, for the next 30 years, he will have paid back $735,450.71 in principal plus interest.

Who says "higher education" doesn't pay off?!?! By the way, this man paints houses for a living. THIS is why I fight the pigs with bare knuckles. When my hands are raw, I suppose I will need to go after the industry with an axe-handle or cast iron pipe.

Anonymous said...

Based on what I have read there is little chance you would be able to find a job there. Several articles at the end of July 2010 quoted the Treasury Secretary as saying that, in the absence of a confirmed CFPB director, it was his role under the law to "stand up" the new agency as soon as possible and that he met with leaders of seven or eight of the federal financial services related agencies about moving forward according to the schedule laid out in the legislation.

Potentially the worst part was that it sounded like a continuation of revolving-door syndrome and "capture" syndrome at their worst. To get things moving quickly, more "wall street experts" would be needed as soon as possible, and, at the very least, the Secretary would commandeer (or borrow) employees from the financial services related agencies.

It is not clear that this is the way to go, particularly in that some of the other agencies which have successfully operated under the media radar within complex credit transactions, financial services and customer service realms were left off of his list -- USDA, HUD, VA and Education. Even better would be to bring in some people who have no credit experience at all but who are very smart people who can ask very smart questions.

I'm going to pose a very basic question: Do agencies that regulate financial services institutions really need to hire people who understand securities, banking, commodities, and so on?

The answer is "no." You need smart people who can ask smart questions. While the Republicans have taken most of the heat from the public and the press for the revolving door and regulatory capture problems, I know for sure that, if you could ask the leaders of the Carter, Clinton and Obama Administrations, they would say, "the hiring departments at those agencies should be hiring people with specific experience in securities, banking, commodities, and so on."

That is how you become bogged down with group-think and yes-men. You will get people who are trapped in a paradigm and can't think independently. The regulators may not be intentionally corrupt. They simply have a difficult time not sympathizing all the time with those they are regulating -- who are usually their former (and future) colleagues. They simply cannot help themselves; their experience has become a liability, rather than an asset, to the regulatory function. In the regulatory agencies, you need people who are both independent and incorruptible.

Cryn Johannsen said...

@September 21 - First off, thanks for the thoughtful and well-articulated comment. The cynic in me knows that you are right, and that's when I begin to really fear for the well-being of our country and its citizens. I think they need new people in there to ask good questions, so I absolutely agree with you. This reminds me of another related point. I am friends with someone who worked in the SEC for 30+ years. He watched it become corrupt and ineffectual as an institution. It was not a story one likes to hear. At this point, my friend told me, the SEC isn't necessarily filled with "bad" or "corrupt" individuals. They just simply have no clue as to what to do as regulators. That institutional knowledge of what it means to be a good regulator has been lost. That's scary.
Here's my question: will we be able to rebuild these institutions, so that they help U.S. citizens, and don't just bow down to corporate interests?

If I can at least try and be part of the solution and still believe that the U.S. Government can be a tool for helping Americans, then I'll settle for that. Of course I'd like to aim much higher. I know people are struggling and barely making ends meet. We MUST change this situation. But how?

Anonymous said...

We need to continue repeating the logic until they are "caught." What they do is generally respond with "politicalisms" such as "that's a non-starter" whenever someone suggests that individuals besides former Wall Street lawyers, economists and brokers should write the new financial reform regs and perform their enforcement at the new agency.

Eventually someone is going to be caught on an inadvertently-live microphone saying "that's a non-starter," and it will go viral on youtube.

warwick555 said...

A bill offering bankruptcy protection for students who take out private student loans has made it through committee:


Lets support it, its a major step in the right direction.

Cryn Johannsen said...

Thanks, Warwick555. I have a good working relationship with TICAS.org, and have posted about their things on here before. I had the privilege of meeting their president over a year ago in D.C.