Senator Warren Won't Be Taking Your BS

By Charles Pierce, Esquire

05 July 13

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he Congress of the United States has determined by inaction to let various people grift over America's college students, and the senior senator from Massachusetts would like to know why in the fk this kind of thing is allowed to happen.

On Friday, Warren sent a letter to the CEO of the student lender, accusing Sallie Mae of "piling on" government supported benefits while reaping "big fees" from students. "While Sallie Mae is finding unique ways to profit from government programs, its borrowers are paying interest rates that are far in excess of the low cost of funds supported by the U.S. taxpayers," she wrote. The latest letter marks the newest round in a lengthy back and forth between the freshman senator and the student lender. What began as an inquiry into a low-interest line of credit Sallie Mae received from a government-created bank that primarily exists to support housing, has broadened into a critique of high student loan interest rates in general. "If we are serious about investing in our future, we should help our students pay for their education - not find ways to squeeze more profits from them. I believe it is time to align priorities in Washington with those of the American people," she added in her Friday letter.

This has been an ongoing thing. One quibble - this is not something that has "broadened into a critique." This is a continuation of all the issues that SPW has been fighting over her entire public career - namely, the connivance of big banks and government agencies to jam it to all the rest of us.

On Monday, Warren set off the debate, sending a letter to the Federal Housing Finance Agency, which oversees the nation's housing enterprises. In it, she asked why Sallie Mae, a private student loan provider, had received a low interest, $8.5 billion line of credit from the Federal Home Loan Bank of Des Moines. The nation's 12 Federal Home Loan Banks were created in the wake of the Great Depression, with the primary goal of ensuring access to low-cost funding for banks, which in turn could use them to offer affordable mortgages. The banks are owned by the nation's financial institutions, which buy into the banks in exchange for access to the low-cost funds, but are sponsored by the government. Noting that Sallie Mae made $2.5 billion on student loan interest in 2012, Warren asked the regulator why it should get a 0.23 percent line of credit, while it was charging 25 to 40 times that amount on its own private student loans.

Good question. Do continue.

In a statement provided to The Hill, a Sallie Mae spokesperson said the line of credit was intended to service a leftover amount of federally guaranteed student loans it still had in its portfolio, although the lender stopped offering such loans in 2010 when Congress killed that program. The spokesperson added that the FHLB credit had "no bearing" on Sallie Mae's private lending activities. That claim resulted in Warren firing off a letter Tuesday to Sallie Mae itself, arguing that such a statement was contradicted by the lender's own corporate filings.

Dear Beltway Bureaucrats: do not attempt to bullshit Senator Professor Warren. This never ends well.

Charlie has been a working journalist since 1976. He is the author of four books, most recently "Idiot America." He lives near Boston with his wife but no longer his three children.