Sallie Mae Eyes Bank Charter
RESTON, Va. - (07/29/05) -- Student loan giant Sallie Mae, whichhas been diversifying beyond its core student loan market, saidThursday it has applied to state regulaters in Utah to charter anindustrial loan company. The so-called back-door bank charter willallow Sallie Mae Bank to raise funds through deposits, just likeother banking companies. Sallie Mae, formally known as SLM Corp.,plans to capitalize its new bank with $100 million, with totalassets projected to reach $1.2 billion after three years. SallieMae was chartered by the federal government in 1972 to facilitate asecondary market for student loans originated by banks and creditunions, but was privatized last year and has expanded to become thelargest originator of student loans in the country, in directcompetition with banks and credit unions. More recently, the formergovernment sponsored enterprise has expanded into financingmortgages, airplane leases and other areas of finance. The companyhas applied to the Utah Department of Financial Institutions for anILC charter, and to the FDIC for federal deposit insurance for itsbank.