PDF Lessons Learned - Front page

Lessons Learned

From

The Privatization of Sallie Mae

DRAFT

U.S. Department of the Treasury

Office of Sallie Mae Oversight MARCH 2006

FOREWORD

In 2004, after Sallie Mae accelerated its actions to fully privatize, then-Assistant Secretary Wayne Abernathy directed the undertaking of this study. He strongly believed that a careful examination and analysis of the history of Sallie Mae's successful privatization would provide Treasury information and lessons learned that would be helpful to Treasury and others as we look forward.

This study was prepared by the staff of the Office of Sallie Mae Oversight, who monitored the safety and soundness of Sallie Mae during the privatization process. Every effort was made to ensure the accuracy of the information it contains and to provide an impartial assessment of what occurred. As is the case with any history, the interpretations made by the authors are important to the structure and conclusions, and these interpretations are not necessarily those of Treasury or the Administration.

Philip Quinn Larry Stauffer Suzanne McQueen Office of Sallie Mae Oversight

March 2006

SLMA Timeline 1972-2005

External Events

1979 Legislation expands availability of student loans

Highlights of Key Sallie Mae's History

1972 - Sallie Mae (SLMA) created by Congress

1973 - Federal Financing Bank (FFB) finances SLMA

1980 ? Legislation strengthens SLMA, FFB arrangement

1989 - S&L crisis/GSE safety & soundness scrutiny

1992- Federal Direct Student Loan Program begins

1981- SLMA enters GSE debt market 1983 ? Non-voting common shares listed for trading 1989 ? SLMA's assets exceed $40 billion 1992 - Treasury oversight, Shareholders get voting rights 1993 - Offset fee imposed, SLMA's market value drops 1994-1995 - Negotiations to privatize SLMA, 1st ABS

1996 - Privatization legislation passes

'98 Russian bond crisis. GSE wind down is side tracked

1997 ? Proxy fight, Reorganization of company 2000 - Acquires USA Group, Issues non-GSE debt 2004 - SLMA is dissolved on December 29th

2005 - SLM Corp is a fully private-sector company

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