Sallie Mae Gets 'Back-Door' BankCharter
RESTON, Va. - (11/07/05) -- Student loan giant Sallie Mae, whichhas been expanding its business outside of its core educationalfinancing, announced Friday it has been approved by the FDIC tooperate a Utah-chartered Industrial Bank. Utah's industrial banks,so-called back-door banks, have allowed many non-financialcompanies, including the auto manufacturers and several largeretailers, to collect insured deposits and provide financialservices beyond their core businesses. The student lender,chartered by the federal government in 1972 to facilitate asecondary market for guaranteed student loans originated by creditunions and banks, plans to capitalize Sallie Mae Bank with $100million and grow it by through brokered deposits, escrow accountsand retail services, to as much as $1.2 billion by the end of thefirst three years. The operations will be conducted through asingle branch in Salt Lake City but will be conducted nationwide bytelephone, mail and the Internet. Meantime, credit unions' ownUtah-chartered credit card bank is still pending.