Robber Barons Still Alive and Well in Newport
"First Marblehead" of Mass. is under investigation by the State of N.Y. regarding its student loan practices. Congress is also planning on holding investigative hearings. Sen. Kennedy's proposed Student Loan Sunshine Act is an attempt to reign in large profits at students' expense. Lest you are not up-to-date, the 20 billion dollar student loan industry is quite lucrative. These loans are easily obtained (95% approval rate) and can be done on-line with no co-signers. They are also more appealing because of the low cap on fed'l loans and the downturn of the housing market. Parents are no longer able to borrow on appreciated housing values.
'"Last year private loans amounted to some $17 billion of the $85 billion in total new student loans; government-backed loans, which First Marblehead doesn't handle, made up the rest."'
First Marblehead does not loan money itself. It acts as a middleman for those needing loans and those giving loans with as much as a 13% advisory fee up front. These loans are packaged and sold. First Marblehead does not service accounts.
Former CEO & Chairman Daniel M. Meyer (a former member of that much-beleaguered class), a major stockholder, is a prominent new Newporter who specializes in purchasing large estates, golfing, and yachting. He does this with monies realized from packaging loans offered to students, often with college logos affixed to them inviting students to believe that these are cheap loans offered through colleges' benefices. Presently he is demolishing a ten million dollar 45 acre estate on Ocean Drive, "Avalon" and is thinking of purchasing the next-door estate. Good place for a new-age robber baron. Ah, but don't forget, he's also contributing money to Lucy's Heath while doing so. Not many of us can turn a building project into a charitable contribution (donating salvaged materials' income) to help with our taxes (sigh).
Meyers (age 42) was forced to (voluntarily) resign after giving gifts of over $30,000 value to a loan officer - one of his companies biggest clients. '"Meyers, known in the investment community as Jabba the Hutt because of his girth and cantankerous disposition, was forced to step down from his executive post, though he remains a major shareholder of the company."' These are verbotten as they tend to look a lot like bribes or kickbacks. Hey, he's just a generous guy.
Students now graduate with an average of $20,000 in loans, and as I learned last summer in knocking on doors, MANY in New England with its pricey colleges owe a lot more, many of them private loans. The average indebteness of college students has more than doubled in the past decade.
A high percentage of these students apply for private loans without ever filling out the forms (estimated 20%) for the much lower priced federal loans. I would attribute this to the LENGTHY and complex form the gov't in its great wisdom provides. They then turn to the private market, not realizing the extra monies (inc. fees) involved. These loans charge up to 4 pts. more than a gov't loan plus fees. '"Today, the average rate in the First Marblehead pool is nearly 11 percent. Interest rates on federal loans, by contrast, are capped at 6.8 percent. "' And these loans, unlike federal ones, are NOT wiped out by bankruptcy. Hey, someone has to pay for the Bentley.
While it is not legal for colleges to accept incentives for government loans, not so with private ones. Salve Regina just paid a fine $26,000 fine for listing some of these loan originators as "preferred" loans while not revealing that they rec'd inventive for doing so. Students and parents often do not realize that they would be better off shopping around.
'"The student loan industry could be in for more jolts. Policy makers and regulators say that there are dangerous parallels between the private student loan and subprime mortgage markets. In both, there have been phenomenal profits, aggressive marketing and, until the recent credit market turmoil, a healthy appetite from Wall Street investors."' These are bottom feeders who hungrily sucked in huge amounts of monies while Congress & regulators slept. They made plenty of monies for themselves while others are/were left holding the bag.
"First Marblehead" is now forced to submit documents regarding to this former CEO and its lending practices going back six years. Did I mention that it's stock which had been doing phenomenally well is no longer doing so?
Two district beneficiaries of Mr. Meyer's largess were Newport Councilors Charles Duncan and Steve Waluk who each rec'd maximum $1000 contributions from him in the last election - guess he's a Republican (go figure). Wonder if they'll return them?
'“There have been populations of students who have been overleveraged for 40 years,” he says. “The bigger problem is that we have students who have been underleveraged.”' Students? Underleveredged? That means your college education gives you a learning potential. You should leverage this with loans. As earnings for potential grads declines, you are being encouraged to incur greater debt that ever. '"Please note carefully that Fleece U degree cannot guarantee you a future income that will allow you to pay off your debts. Many of our most promising graduates are now, three or four years later, working for $8-12 an hour serving up lattés, counseling disturbed youth or creating business computer networks. They are set for a lifetime of debt, and we are proud that they first began to accrue it right here, on our lovely mock Oxfordian campus."'
So the next time you stand on the shore watching him sail by in his 60 ft. yacht, "Numbers" (he has two smaller yachts) give him a wave. And thank him for the recent donation of 20 mil to the Univ. of Va. After all, some of that college debt you're paying off may well have helped obtain his share of the American dream. And if you can't yet afford it (and you many never be able to), know that at the very least, you are "well leveraged."
'"Last year private loans amounted to some $17 billion of the $85 billion in total new student loans; government-backed loans, which First Marblehead doesn't handle, made up the rest."'
First Marblehead does not loan money itself. It acts as a middleman for those needing loans and those giving loans with as much as a 13% advisory fee up front. These loans are packaged and sold. First Marblehead does not service accounts.
Former CEO & Chairman Daniel M. Meyer (a former member of that much-beleaguered class), a major stockholder, is a prominent new Newporter who specializes in purchasing large estates, golfing, and yachting. He does this with monies realized from packaging loans offered to students, often with college logos affixed to them inviting students to believe that these are cheap loans offered through colleges' benefices. Presently he is demolishing a ten million dollar 45 acre estate on Ocean Drive, "Avalon" and is thinking of purchasing the next-door estate. Good place for a new-age robber baron. Ah, but don't forget, he's also contributing money to Lucy's Heath while doing so. Not many of us can turn a building project into a charitable contribution (donating salvaged materials' income) to help with our taxes (sigh).
Meyers (age 42) was forced to (voluntarily) resign after giving gifts of over $30,000 value to a loan officer - one of his companies biggest clients. '"Meyers, known in the investment community as Jabba the Hutt because of his girth and cantankerous disposition, was forced to step down from his executive post, though he remains a major shareholder of the company."' These are verbotten as they tend to look a lot like bribes or kickbacks. Hey, he's just a generous guy.
Students now graduate with an average of $20,000 in loans, and as I learned last summer in knocking on doors, MANY in New England with its pricey colleges owe a lot more, many of them private loans. The average indebteness of college students has more than doubled in the past decade.
A high percentage of these students apply for private loans without ever filling out the forms (estimated 20%) for the much lower priced federal loans. I would attribute this to the LENGTHY and complex form the gov't in its great wisdom provides. They then turn to the private market, not realizing the extra monies (inc. fees) involved. These loans charge up to 4 pts. more than a gov't loan plus fees. '"Today, the average rate in the First Marblehead pool is nearly 11 percent. Interest rates on federal loans, by contrast, are capped at 6.8 percent. "' And these loans, unlike federal ones, are NOT wiped out by bankruptcy. Hey, someone has to pay for the Bentley.
While it is not legal for colleges to accept incentives for government loans, not so with private ones. Salve Regina just paid a fine $26,000 fine for listing some of these loan originators as "preferred" loans while not revealing that they rec'd inventive for doing so. Students and parents often do not realize that they would be better off shopping around.
'"The student loan industry could be in for more jolts. Policy makers and regulators say that there are dangerous parallels between the private student loan and subprime mortgage markets. In both, there have been phenomenal profits, aggressive marketing and, until the recent credit market turmoil, a healthy appetite from Wall Street investors."' These are bottom feeders who hungrily sucked in huge amounts of monies while Congress & regulators slept. They made plenty of monies for themselves while others are/were left holding the bag.
"First Marblehead" is now forced to submit documents regarding to this former CEO and its lending practices going back six years. Did I mention that it's stock which had been doing phenomenally well is no longer doing so?
Two district beneficiaries of Mr. Meyer's largess were Newport Councilors Charles Duncan and Steve Waluk who each rec'd maximum $1000 contributions from him in the last election - guess he's a Republican (go figure). Wonder if they'll return them?
'“There have been populations of students who have been overleveraged for 40 years,” he says. “The bigger problem is that we have students who have been underleveraged.”' Students? Underleveredged? That means your college education gives you a learning potential. You should leverage this with loans. As earnings for potential grads declines, you are being encouraged to incur greater debt that ever. '"Please note carefully that Fleece U degree cannot guarantee you a future income that will allow you to pay off your debts. Many of our most promising graduates are now, three or four years later, working for $8-12 an hour serving up lattés, counseling disturbed youth or creating business computer networks. They are set for a lifetime of debt, and we are proud that they first began to accrue it right here, on our lovely mock Oxfordian campus."'
So the next time you stand on the shore watching him sail by in his 60 ft. yacht, "Numbers" (he has two smaller yachts) give him a wave. And thank him for the recent donation of 20 mil to the Univ. of Va. After all, some of that college debt you're paying off may well have helped obtain his share of the American dream. And if you can't yet afford it (and you many never be able to), know that at the very least, you are "well leveraged."
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