Consider it another sign that the new Democratic Congress is making good on its vow to ramp up its oversight of the student loan industry.
Tuesday, Rep. George Miller (D-Calif.), chairman of the House of Representatives Education and Labor Committee, and Rep. Barney Frank (D-Mass.), chairman of the House Financial Services Committee, said they had requested information from the company, the White House , and the Education Department about the sale of 400,000 shares of Sallie Mae stock by the student loan behemoth's chairman, Albert L. Lord. The stock was sold only days before President Bush released his 2008 budget, which contained proposals to cut into lender profits that sent Sallie Mae stock plummeting 9 percent.
The president called for around $18 billion in subsidy cuts and fee increases for the lending industry , and markets responded by sending SLM Corp. stock spiraling downward from $46.46 to $42.37 -- the lowest closing price in two years.
“Given the timing between your stock sale and the public announcement of lender cuts, we seek additional information about these events,” the two members of Congress wrote in the letter to Lord . The letter asks for all communications about the lending industry dating to last November 1 between Sallie Mae and the Department of Education, including phone and meeting logs, e-mails, and meeting minutes.
“We look forward to responding to any questions that members may have on this matter,” said Tom Joyce, vice president for corporate communications at Sallie Mae. “The timing was completely and utterly coincidental.”
Joyce said that Lord had notified the corporate board during a regularly scheduled meeting on January 23 that he planned to sell some personal stock to fund several private business ventures.
“It’s undoubtedly in the board minutes,” he said of Lord’s announcement on the stock sale. Lord sold 400,000 shares, netting $18.3 million. Joyce said that this is a little less than 5 percent of the stock that Lord is allowed to own.
Miller and Frank's letters to the company, the Department of Education and the White House ask for written responses within 10 days.
The letters follow the introduction in the Senate this month of the Student Loan Sunshine Act, which its sponsors, Sen. Edward M. Kennedy (D-Mass.) and Sen. Richard J. Durbin (D-Ill.), say is designed to force lenders and colleges to disclose information about any "special" arrangements in which institutions have agreed to offer products from certain lenders to their students, among other things.