House Financial Services Committee Chair Rep. Maxine Waters (D-Calif.) tried to hold three bank CEOs accountable for the student loan crisis – until one of them pointed out to her that the federal government took over the student loan business back in 2010.
At a committee hearing on Wednesday, Rep. Waters spelled out the crisis and demanded to know “What are you guys doing to help us with this student loan debt?” One by one, beginning with Bank of America CEO Brian Monahan, Waters called on the bank heads. After the first two told her that their banks exited the student loan business years earlier, JP Morgan’s James Dimon explained to Rep. Waters that the government had taken over student lending back in 2010.
Rep. Waters: “Today, there are more than 44 million Americans that owe – this is student loan crisis - $1.56 trillion in student loan debt. Last month, this committee received testimony that last year, one million student loan borrowers defaulted, which is on top of the one million borrowers who defaulted the year before.
“What are you guys doing to help us with this student loan debt? Who would like to answer first? Mr. Monahan, big bank.”
Bank of America CEO Brian Monahan: “Uh, we stopped making student loans in 2007 or so.”
Rep. Waters: “Oh, so you don’t do it anymore. Mr. Corbat?”
Citigroup CEO Michael Corbat: “We exited student lending in 2009. Mr. Dimon?”
JP Morgan Chase CEO James Dimon: “When the government took over student lending in 2010 or so, we stopped doing all student lending.”
Waters then changed her line of questioning to address small business loans.
As Investors Business Daily reports, the government removed banks from the student loan business in 2010:
“In 2010, President Obama effectively nationalized student lending by cutting banks — which had been offering government-backed loans to students — out of the equation and having the government make the loans itself.”