LADY GAGA & OPRAH WINFREY TEAM UP

Community Banks Slowly Warm Up to Private Student Loans.(Community Banking) see here citi student loans

American Banker April 3, 2012 | Peters, Andy Byline: Andy Peters A number of smaller banks are considering making more student loans, even as bigger banks head for the exits.

It is unclear if small banks can benefit from a pullback by bigger banks. Student loans could offer a way for small banks to diversify, not to mention access to a large market that’s growing.

There are plenty of possible deterrents, including a proposal by Sen. Richard Durbin to let borrowers discharge private student loans in bankruptcy. It is also unclear how the Consumer Financial Protection Bureau will regulate private student lenders.

Some bankers believe that they can succeed with student lending as long as they are disciplined.

“We’re still looking to see if it is something we want to stay in but so far we’ve gotten good feedback,” says Todd DeFee, the retail and student loan officer at Peoples State Bank in Many, La., which began making student loans for the 2011-12 academic year.

Peoples began making loans after clients for help sending their children to nearby Northwestern State University. “It peaked the interest of the higher ups,” DeFee says, adding that the $497 million-asset bank is talking to bigger schools such as Tulane University and Louisiana State University.

Potential bankruptcy changes could cause trouble, but otherwise now is a good time for small banks to enter the business, says Kevin Moehn, a Reston, Va., consultant who works with community banks on student loans.

The market appears ready for new lenders, just two years after the federal government eliminated subsidies and became a direct lender. U.S. Bancorp late last month pulled out of the market, and JPMorgan Chase sharply reduced its lending in the area. Small banks such as First Financial Bankshares in Abilene, Texas, have also exited the business.

Students continue to enroll in college, apply for loans, and amass debt. Total outstanding student debt in the United States topped $1 trillion this year, Rohit Chopra, the CFPB’s student loan ombudsman, said in March.

Shakeout from the government’s decision to become a direct lender means market boundaries are clearly set for banks, Moehn says. The size of the federal loan market is about $100 billion, and the private loan market is about $9 billion and growing, he adds.

That’s a huge amount of business, providing plenty of growth opportunities for community banks, says Moehn, who is also associated with Student Loan Finance, an Aberdeen, S.D., company that administers student loans for smaller banks.

Some smaller banks exited student loans in recent years because of the difficulty in securitizing the loans. Since there is no market for securitizations, banks that make student loans should be prepared for the long haul. “Banks should be looking at putting these loans on their balance sheets and keeping them there,” Moehn says.

Changes notwithstanding First Financial is not looking to reenter the market, says Bruce Hildebrand, the $4.1 billion-asset company’s chief financial officer. “The profitability of those loans for us was taken out of the system,” he says. “We were losing money every time we made the loans, so we got out of the business.” Other community bankers are taking a pass, with some saying that student loans are best left to the very large banks.

“The law changes almost made it so that borrowers were really better off going through” SLM Corp., says Brad Tidwell, the president and CEO of Citizens National Bank, a unit of Henderson Citizens Bancshares in Henderson, Texas. “We refer our customers to Sallie Mae or a private student loan originator.” Durbin also has student lending industry in his crosshairs. The Illinois senator has said he believes there is an opening to allow private student loans to be discharged in bankruptcy because the interest rate on federal student loans is set to double in July, to 6.8%, and some in Congress want to prevent the rate hike. site citi student loans

Private student loans offered by small banks, which are usually have variable rates, are not tied to the federal rate, Moehn say. Banks getting into the business also seem to be taking a more conservative approach to lending.

Peoples State has set aside $1 million for student loans, DeFee says, or an amount equal to less than 1% of its total loans at Dec. 31. The average loan is $3,500. The bank avoids lending more than the cost of tuition, eliminating cases where students could use part of a loan like a credit line.

“We make sure we know who we’re lending to, we check the credit scores, and we have a co-signer,” DeFee says. “We’re not just giving them the money.” The Obama administration has so far declined to endorse Durbin’s plan. Treasury Secretary Timothy Geithner has been non-committal about the legislation, though he suggested in a March 28 congressional hearing that he is broadly sympathetic with Durbin’s concerns about the private student loan market.

If it becomes law, the bankruptcy proposal “would make private loans more expensive and less easy to obtain,” Moehn says. “By definition, many of these students are bankrupt. These loans are intended to be made to people who cannot otherwise get a loan.” As a requirement of the Dodd-Frank Act, the CFPB must issue a joint report to Congress by July 21 with the Department of Education on the student loan market. The CFPB has authority over all private student loan issuers, and has a designated office to serve as an ombudsman on such issues.

Small banks welcome any calls from the CFPB for more disclosure of student loan terms, Moehn says. “We want to make sure students understand the deal they’re getting.” “The way we’re doing this, I can sleep well at night and I don’t feel like I’m the bad guy,” DeFee adds.

Peters, Andy

NAM and EPA Announce Memorandum of Understanding on Energy Efficiency

US Fed News Service, Including US State News April 21, 2008 The National Association of Manufacturers issued the following news release: website memorandum of understanding

In a historic agreement, the National Association of Manufacturers (NAM) and U.S. Environmental Protection Agency (EPA) today solidified their strong commitment to a clean environment and energy security by announcing a Memorandum of Understanding (MOU) to help improve the energy efficiency of U.S. manufacturers, who use nearly a third of the energy in the United States.

“This new partnership with EPA leverages the unique strength of U.S. manufacturers as the world’s leaders in energy efficiency and innovative green technology,” NAM President and CEO John Engler said. “Under the agreement, the NAM will challenge its member companies to reduce energy use across all operations by 10 percent or more. If the manufacturing industry reduced its energy use by 10 percent, manufacturers would save nearly $10.4 billion and enough energy to power nearly 10 million American homes for one year.

“Energy efficiency is critical to a clean environment and to energy security. As we celebrate Earth Day this week, let’s remember that building upon U.S. manufacturers’ leadership in energy efficiency makes good economic and business sense,” Engler continued.

EPA Administrator Stephen L. Johnson noted, “Environmental responsibility is everyone’s responsibility – and today I’m pleased the NAM is taking this motto to heart. By making smart energy choices, U.S. manufacturers are helping improve our nation’s energy and environmental outlook.” The NAM energy management call-to-action for manufacturers is in cooperation with EPA’s Energy Star Challenge, a voluntary, market-based program to reduce greenhouse gas emissions through energy efficiency. EPA will support NAM members in developing and refining company-wide energy management programs, sharing best energy management practices, providing training and recognizing the energy efficiency achievements of NAM members. see here memorandum of understanding

“The NAM has the potential to reach more than 100,000 corporations, both large and small,” Engler continued. “With this agreement, the NAM will make sure its members and the 225 associations that comprise the Council of Manufacturing Associations have access to all the Energy Star resources of the Environmental Protection Agency to start saving energy.” The NAM signed a similar Memorandum of Understanding with the U.S. Department of Energy in June 2007 that supports a variety of activities aimed at assisting manufacturers to initiate and implement energy management programs.

The most recent Memorandum of Understanding between the NAM and EPA is available on-line at www.nam.org/EPAMOU.

To interview manufacturing leaders in energy efficiency, contact Laura Narvaiz at lnarvaiz@nam.org or 202-637-3104.

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