Sallie Mae Outs CEO, Pre-Takeover

RESTON, Va. – Sallie Mae, under fire from the new Democratically controlled Congress for its student loan practices, said yesterday its president and CEO Thomas Fitzgerald has agreed to resign as the company is being taken private in a huge $25 billion takeover. Chief Financial Officer C.E. Andrews will replace Fitzpatrick. The departure of Fitzpatrick, just two years after he took the helm from Albert Lord, the man who privatized the former government sponsored enterprise, was an abrupt turnaround for the group that agreed to acquire the student loan giant, which said just last month that it intended to retain Sallie Mae's management, including its CEO. Fitzgerald’s exit comes amidst a major scandal in the student loan industry where lenders have conceded providing a variety of payments and financial perks to colleges in order to gain their implicit endorsement to student borrowers. In addition, the new Congress is proposing major cuts in the guaranteed student loan program that would affect lenders, Like Sallie Mae, the largest player in the $85 billion market. Sallie Mae is being taken private by a group that includes J.C. Flowers, a private hedge fund, and banking giants Bank of America and JP Morgan Chase.