Congress Probes Timely Sale of Sallie Stock
Wednesday, February 14, 2007
Congressional investigators are looking into Sallie Mae Chairman Albert L. Lord's sale of $18.3 million worth of company stock this month, just days before President Bush proposed a huge cut in subsidies to the lending industry that caused Sallie Mae shares to nosedive.
The chairmen of the House Financial Services and Education committees sent letters yesterday to the White House counsel, the education secretary and Sallie Mae, asking for detailed information on all contact between the Reston-based student lending giant and the Bush administration over the past three months.
"Given the timing of the Sallie Mae stock sale and the release of the President's budget, the committee is seeking more information as a matter of routine oversight," Rep. George Miller (D-Calif.), chairman of the House Education Committee, said in a statement.
Sen. Edward M. Kennedy (D-Mass.) sent a letter yesterday to the Securities and Exchange Commission calling on it to investigate the transaction. The Senate Education Committee, which is chaired by Kennedy, is also looking into the sale, said Melissa Wagoner, a spokeswoman for Kennedy.
Lord sold 400,000 shares of Sallie Mae stock on Feb. 1 and Feb. 2. Three days later, Bush announced a budget that would cut subsidies to the student-lending industry by about $19 billion over five years, which caused Sallie Mae's stock to plummet about 9 percent that day, to its lowest closing price in more than two years.
Tom Joyce, a spokesman for Sallie Mae, said last week that Lord had no prior knowledge that the Bush administration would propose such cuts and called the timing of the sale "completely coincidental." He said Lord had told the company about his plans to sell the stock nine days before the sale.
"We look forward to responding to any questions that members of Congress may have on this transaction," Joyce said yesterday.
The House began looking into the sale after The Washington Post reported Saturday that Lord would have received about $1.4 million less from the transaction if he had sold his shares at the closing price on the day Bush unveiled his budget.
The letters from Miller and Rep. Barney Frank (D-Mass.), chairman of the House Financial Services Committee, asked Sallie Mae and the Bush administration for a response within 10 days.