Thursday, February 16, 2006
Man is conceived in sin and born in corruption. From the stench of the didie to the stink of the shroud, there is always something.
— Robert Penn Warren, All the King’s Men
The great news is that we’re rid of Tom DeLay. The coffin of the Hammer, as he was known when majority leader, has been nailed shut. And the man who cultivated the field of lobbyists has been replaced by John Boehner an icon of virtue whose conduct was simply an aberration when he was seen some years ago handing out checks from tobacco companies on the floor of the House to its members. He did it as a lark-not that he was singing the tobacco companies’ tunes.
Mr. Boehner is not in the pocket of any lobbyist. They are simply occasional best friends. One of his best friends is the gal named Sallie Mae whose blandishments Mr. Boehner has proved himself unable to resist. And who can blame him. She has lots of appeal.
Sallie Mae makes her money by providing student loans. According to a report in the New York Times, she makes, buys and sells more student loans than any other lender. She also is the biggest contributor to members of the House Education Committee that Mr. Boehner chairs.
One of Sallie’s best friends and a good friend of Mr. Boehner is Albert L. Lord. He was Sallie’s chief executive officer from 1997 to 2005 and is presently her board chair. From 1995 to 2004 Sallie paid Mr. Lord $225 million. Sallie owns a corporate jet. She, Mr. Lord and Mr. Boehner made several trips to Florida on that corporate jet for golf outings. Sallie also helped throw a party for the congressman in New York during the 2004 Republican National Convention. Mr. Boehner’s daughter works for the General Revenue Corporation, a loan-collection company owned by Sallie. None of this, of course, affects the congressman’s attitude towards his gal Sal. He likes her because of what she is, not because of what she and her friends do for him and his family.
There are lots of lending institutions like Sal that make money from student loans. As chairman of the Education and Workforce Committee it fell to Mr. Boehner to come up with $13 billion in cuts to that program. Lenders were nervous. They were nervous because of the way the program is structured. If a student defaults, the lender is not left holding the bag. The taxpayer reimburses the lender. The lender appreciates that since a loan with no risk is the kind of loan all lenders like. Lenders feared that with the mandate for cuts imposed on Mr. Boehner, congress might interfere with this tried and true way of giving them pleasure while making student loans.
In a speech in December to the annual meeting of the Consumer Bankers Association, Mr. Boehner reassured his friends. He said: “Know that I have all of you in my trusted hands,” adding later in the speech: “I’ve got enough rabbits up my sleeve.” His good friend Sallie was in the audience. She liked what she heard. She felt well rewarded for the airplane rides she’d given him and the more than $100,000 she and her employees gave him during the 2003-2004 election cycle. And well she might have.
The budget has passed Congress and gone on to the president for his signature. In the same week that Mr. Bush gave his State of the Union address and emphasized the need for more teachers of math and science the budget bill he signed will cut $12.7 billion from student loan programs. Interest rates for student loans will increase and the ability to consolidate loans to take advantage of reduced interest rates will disappear.
Historically students were permitted to consolidate loans only one time in order to take advantage of lower interest rates. If lower interest rates subsequently became available, students were permitted to move their consolidated loans to the Department of Education’s Direct Consolidation program and then were given a second chance to take advantage of lower interest rates by reconsolidating again with a private lender. The ability to do that was removed by the budget bill. That makes students unhappy since they would like to think they are just like any other borrower who can always refinance to take advantage of reduced interest rates. Sallie likes the new rules. It means she’ll have lots of long term relationships even though when her interest peaks her swains will find theirs waning. No matter. They’ll remain in her thrall. Mr. Boehner will understand their feelings, he himself having been in her thrall for many years. He can tell them they’ll like her better the more they get to know her. Just as he has.