HARRISBURG, Pa. - (03/10/05) -- The Pennsylvania CU Associationurged Gov. Ed Rendell Wednesday to reject a hostile takeover of thestate-owned student loan agency by Sallie Mae, saying the state'scollege students and their families would be better served byallowing the not-for-profit loan agency to remain out of thestudent loan giant's hands. "For more than 40 years (PennsylvaniaHigher Education Assistance Agency) has provided low-cost loans andgrants to Pennsylvanians including those with modest means," wrotePCUA Chairman Ron Lasich to the Governor. "Like credit unions,PHEAA is a nonprofit that puts people ahead of profits." Hesuggested Sallie Mae would not be offering $1 billion to take overPHEAA's business if it did not expect the move to add to thecompany's profits. PHEAA has the largest market share of studentloans in Pennsylvania and provides services to more than 170 creditunions. Sallie Mae made the offer to the PHEAA board in Decemberbut the board summarily rejected the bid, prompting the company tolobby directly to state lawmakers who control the state-agency.State lawmakers held hearings on the offer last month. Thelegislature could override the board's rejection of the offer,which would need to be approved by Gov. Rendell.
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The Cleveland-based bank is projecting steady growth in net interest income even as credit losses remain manageable. But Chairman and CEO Chris Gorman also said that he thinks a recession is likely.
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The first-quarter increase involved commercial real estate loans, including some problematic multifamily loans and an office credit, but none of the criticized loans were to consumers, officials at the Dallas company say. Further CRE deterioration is anticipated.
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The Detroit-based company is exploring ways to make more consumer auto loans without running afoul of stricter capital standards that are expected from the Federal Reserve. Possible approaches include more securitizations and the use of credit risk transfers.
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The House Financial Services Committee also sent to the full House two bipartisan bills, including one that would prevent large banks from opting out of having to recognize Accumulated Other Comprehensive Income in regulatory capital.
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Charge-offs and nonperforming loans rose at the Georgia bank in the first quarter. But it blamed the problem on one large client and said the matter has been resolved.
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Amid healthy first-quarter loan growth and improving credit quality, Discover Financial Services slashed its profits by $800 million to offset remediation costs from a 16-year period when it overcharged certain merchants.
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