Last Friday, the Obama administration issued a “recommendation” to Congress. These reports always seem to come out on a Friday in the hopes, I suppose, that no one is paying attention. This one, much like many other “recommendations”, is a kick in the whatever to the private sector.
Well, what isn’t these days.
The Department of Education, and our newly minted Consumer Financial Protection Bureau (which, under Dodd-Frank, isn’t answerable to Congress, even for it’s annual budget) has decided that millions of students were duped by private lenders, such as Sallie Mae and Wells Fargo, into getting student loans.
Yes, horror of horrors, I am led to believe these poor students were simply walking past, for example, a Wells Fargo Bank branch one day, were hauled inside by an unscrupulous banker, and, forced to take out a student loan to pay for their education. Apparently they had no idea they actually would have to pay the money back, let alone interest on what they borrowed.
Because of this reprehensible conduct, President Obama has identified a solution…let these students wipe out what they owe by filing for bankruptcy. Currently, we are operating under,
…a 2005 law that, except in rare circumstances, prohibits discharging private student loans through bankruptcy.
This law, according to the President, is obviously not good. There is absolutely no reason why your next door neighbor should actually have to repay your local bank or credit union for the money loaned to your neighbor to get a college education.
Fortunately, though, this “recommendation” does not apply to any loan your neighbor got, basically from you, in the form of a “federal” student loan.
Expanding the concept to federal loans would be politically controversial given that it would likely result in taxpayer losses…
And just exactly who does this administration think will bear the losses if this recommendation is passed for private student loans? The Tooth Fairy?
Oh, wait, I forgot. This is an election year and all that matters is votes.
The private sector, and I suppose the Tooth Fairy, be damned.