WASHINGTON -- Rush is right.
At least, according to Fritz Elmendorf of the Consumer Bankers AssOciation. Mr. Elmendorf said Mr. Limbaugh was correct when he said banks that make student loans are incurring risk
Mr. Limbaugh's accuracy was questioned recently when the media watchdog group, Fairness and Accuracy in Reporting, noted 43 instances where Mr. Limbaugh reportedly said something on his radio or television show or in his books that was incorrect.
One example was this statement made on his radio show in 1993:
"Banks take the risks in issuing student loans and they are entitled to the profits."
FAIR rebutted Mr. Limbaugh by stating that banks take no risks in issuing student loans, which are federally insured.
Mr. Limbaugh countered this by quoting Mr. Elmendorf, vice president of communications for the CBA, in a document released to the media last month.
"The federal government instituted the guaranteed student loan program to provide incentives to banks to make risky loans to students With no assets, no credit records, no full-time jobs, and no permanent address," Mr. Elmendorf said.
"This is enormous risk," he added. "The government helps mitigate this risk.
But, the government will only pay off defaulted loans if banks have followed a very careful, very detailed, very exacting set of procedures of servicing and collecting student loans.
"If banks don't follow the guidelines precisely, they won't be reimbursed by the government and they are left high and dry. That is risk," he concluded.
Mr. Elmendorf said Monday that he made the statement after being contacted by a staff member for Mr. Limbaugh.
Kimberly Sinclair, who is executive vice president of Stillwater National Bank, also agreed with Mr. Limbaugh's statement.
"There are so many rules you have to follow to make them enforce the guarantee," Ms. Sinclair said.
"If you miss checking a box, or filling out one line, you can lose the guarantee."
Jim Naureckas, editor of FAIR's magazine Extra, said FAIR stood by its assertion that the risk is assumed by the federal government, not the banks.