Financial Derivatives Push Sallie Mae Deep Into The Red

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RESTON, Va. – Student loan giant Sallie Mae, which is in the midst of another restructuring after student loan legislation that changed the market, on Tuesday reported that net mark-to-market losses on its hedging caused a $495 million loss for its fiscal third quarter, compared to a $159 million net for the same quarter last year.

The loss was created after the company wrote off $660 million of goodwill and intangible assets and an unrealized net loss from mark to market on hedging activity. The moves, which included a $344.5 million loss on derivatives, created negative net income of $139.5 million for the third quarter.

For the first three quarters of the year Sallie Mae reported net income of $83.3 million, compared to a $15.7 million net for the same period last year.

The third quarter highlight was the purchase of $28 billion of securitized federal student loans and related assets from The Student Loan Corporation. The transaction is expected to close by year-end 2010.


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