Sallie Mae CEO Speaks, Stocks Plunge To 5-Year Low
Shares of Sallie Mae plunged to a five-year low Wednesday after the student lender's CEO said a dividend cut may be needed to bolster finances crimped by rising loan defaults and borrowing costs.
In the wake of a failed $25 billion buyout and a reduced profit forecast for 2008, Sallie Chairman and CEO Albert L. Lord tried to calm investors during a conference call. But analysts expressed dissatisfaction with Lord's answers, or lack of them, to their questions.
A group of investors led by private-equity firm J.C. Flowers & Co. reneged on its offer to buy Sallie -- and brushed off Sallie's attempt to revive the transaction at a lower price -- in part because of a new law that reduces federal subsidies on student loans.