The Privatization of Sallie Mae and its Consequences

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Sallie Mae as a GSE As a GSE, Sallie Mae remained subjectto political risk In 1993 political risk materialized• 30 bp (0.3 percent) offset fee• New Federal Direct Loan Program 1989: Sallie Mae held 27% of federalguaranteed loans outstanding; second largestcompany held 4 percent6
Privatizing Sallie Mae 1996 Sallie Mae Privatization Act• Established privatization process Holding company structure• Holding company could expand activities Long transition period to operate GSE (to2008) Generally, no affiliation of GSE and a bank ED could request lender-ofof-last-resort function Modest exit fees ($ 36 million + $ 5 million) Shareholder approval required7
Page 1 and 2: The Privatization of Sallie Mae and
Page 3 and 4: Sallie Mae as a GSELower capital an
Page 5: Sallie Mae as a GSE Sallie Mae deve
Page 9 and 10: Sallie Mae’s s TransitionThe comp
Page 11 and 12: Sallie Mae’s s Continuing GrowthT
Page 13 and 14: Sallie Mae’s s Continuing GrowthN
Page 15 and 16: Sallie Mae Today Sallie Mae possess
Page 17: Public Policy ImplicationsThere als

The Privatization of Sallie Mae and its Consequences

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