'Like Martha Stewart': Congress investigating student loan corps' sale of stock before Bush budget
Following a sale of 400,000 shares of stock by the chairman of the board of a major student loan corporation just before its stock prices dipped, two Congressional committees have initiated an investigation into communications between the White House, Education Department, and the Sallie Mae Corporation. One nongovernmental analyst told RAW STORY that the situation was "reminiscent of Martha Stewart."
Mutliple news sources reported last week that Sallie Mae Corporation Chairman Albert Lord (pictured above) had sold 400,000 shares of his stock in the nation's largest student loan provider on Thursday, Feb. 1, and Friday, Feb. 2. The following Monday, Feb. 5, the federal government released its Education budget, which included a substantial cut in federal subsidies for aid providers.
Sallie Mae's stock price, which closed on Friday the 2nd at $46.46, fell to $42.37 on Monday the 5th. The sale before the roll out of the federal education budget saved Lord more than $1.5 million.
"This is reminiscent of Martha Stewart," said Michael Dannenberg, Director of the Education Policy Program at the New America Foundation, who also produces the Higher Ed Watch blog.
"The sale of 400,000 shares is an irregular sale by Mr. Lord," he added. "I don't know if there's fire behind the smoke, but there's certainly smoke."
Two Congressmen today sent three letters to White House Counsel Fred Fielding, Secretary of Education Margaret Spellings, and Sallie Mae Corporation Chairman of the Board Albert Lord, seeking communications between the White House, Education Department, and Sallie Mae since Nov. 1 of last year. Rep. George Miller (D-CA), Chairman of the House Education and Labor Committee, and Rep. Barney Frank (D-MA), Chairman of the House Committee on Financial Services, requested the transmission of written correspondence, e-mails, meeting minutes, notes, telephone and meeting logs in the next ten days.
Education and Labor Committee Tom Kiley would only comment to RAW STORY that his office was "hoping for cooperation" with the committees' requests, and would offer no judgment on whether the Sallie Mae Corporation's defenses of its chairman's stock sale were legitimate.
At press time, Sallie Mae, the Department of Education, and the White House had not responded to RAW STORY's phone calls inquiring about the Miller and Frank letters.
Yesterday, a Sallie Mae spokesman told the Indianapolis Star newspaper that the sale of stock before the federal budget release was "utterly coincidental." The Chairman of Sallie Mae's audit committee also told the Washington Post that Lord is "honest as the day is long."
At the same time, there are extensive links between the Bush administration and the Sallie Mae Corporation, particularly in the White House and Education Department. In 2004, the Washington Post reported that Sallie Mae provided $250,000 to the Bush-Cheney Inauguration Committee. At the time, Lord was the Vice Chairman of Sallie Mae's board.
Additionally, Theresa S. Shaw, the Chief Operating Officer for Federal Student Aid in the Department of Education, served as a Senior Vice President and Chief Information Officer at Sallie Mae until 1999.