First Marblehead to be investigated?

Sometimes when we get bored, we browse through the "Asset Backed Alert", http://www.ABAlert.com, it's a financing industry weekly newsletter. Sometimes there's stuff in there about student lending financing deals.

A strange bit in the April 20 episode this week though. Asset-Backed Alert is reporting gossip/rumors that First Marblehead is next on Cuomo's list. They don't cite any sources or quotes to substantiate the rumour. But we're going to perpetuate the gossip too.

First Marblehead is the mack daddy of private ed loans. They don't write loans or fund them directly, but rather they put together a network of marketers and banks to issue loans, and First Marblehead creates the secondary market by securitizing the products. They make a ton of cash doing this. They're sort of a mini-Sallie Mae during the startup days of Sallie.

Naturally, if someone is making money by lending to students, they have a big ol' target painted on them right now.