Published: Saturday 21 July 2012
“The report, released jointly by the U.S. Department of Education and the CFPB, is the government’s first major study of the murky private student loan market, for which there has long been little regulation or reliable data.”

 

Much like the mortgage market, the market for private student loans has gone through a big boom and a messy bust. Some banks and lenders played fast and loose with student loans, aggressively marketing them to borrowers who couldn't afford that amount of debt, according to a new government report.

"Borrowers who took out loans at the height of the boom are still suffering from those excesses," said Consumer Financial Protection Bureau Director Richard Cordray in remarks to reporters on Thursday. The report, released jointly by the U.S. Department of Education and the CFPB, is the government's first major study of the murky private student loan market, for which there has long been little regulation or reliable data.

American borrowers currently owe more than $150 billion in private student loans, according to the report. Default rates soared in the years since the financial crisis, and more than $8 billion in private loans are in default.

In the run-up to the financial crisis in 2008, the boom in risky private student loans was fueled by Wall Street investors' demand for securities backed by bundles of student loans, the report said. See the below graph, which draws from proprietary loan data collected from major lenders:

Private student loan volume 2005-2011 (p. 17)

After the crisis, investor interest in all manner of loan-backed securities — including student-loan-backed securities — collapsed. And with less packaging and reselling of loans to fund the creation of new loans, the private student loan market has since dialed back and raised its lending criteria.

Published: Friday 20 January 2012
“Newly-appointed bureau head Richard Cordray intends to research the industry and its enforcement actions that pose ‘immediate risk to consumers and are clearly illegal.’”

As a growing number of Americans slip out of the middle-class into economic insecurity, they are increasingly vulnerable to predatory lending schemes like the payday loan. Each year, about 12 million Americans incur long-term debt by taking out a short-term loan that’s intended to cover a borrowers’ expenses until they receive their next paycheck. Payday lending takes “unfair advantage of lower-income borrowers,” with most taking out nine repeat loans per year with an interest rate as high as 400 percent. Forty-four percent of borrowers ...

Published: Thursday 5 January 2012
“Neither the Constitution nor the courts have specified how long the Senate must be in recess for a president to make a recess appointment.”

Right-wing media have called President Obama's recess appointment of Richard Cordray as director of the Consumer Financial Protection Bureau (CFPB) during a Senate recess of fewer than three days an "open declaration of war on constitutional principles" and an "unprecedented power grab." However, neither the Constitution nor the courts have specified how long the Senate must be in recess for a president to make a recess appointment; past presidents have made recess appointments during recesses of three days or fewer; and congressional Republicans are engaged in unprecedented obstructionism that is preventing hundreds of Obama nominees from being confirmed.

"Unprecedented Power Grab": Conservative Media Attack Cordray Appointment

Big Government: Cordray Appointment "Would Be An Open Declaration Of War On Constitutional Principles And Completely Undermine Our System Of Checks And Balances."From a January 3 post on Andrew Breitbart's Big Government website, headlined "Red Alert: New Unconstitutional Presidential Power Grab May Be Imminent":

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