“The Power of Yes”

Answer: Kerry Killinger, CEO of Washington Mutual and Long Beach Mortgage. Word is that WaMu’s Chief Credit Officer countered that he believed in “The Wisdom of No,” but he got shouted down. Kerry Killinger was named “Banker of the Year” by American Banker in (more…)

GSE Reform: One analyst suggests that anyone investing in Fannie or Freddie right now is making two bets: one that the GSEs will remain profitable, and two that real GSE reform is not going to happen any time soon.

Senator Bob Corker has introduced a bill that would leave shareholders with nothing: “If Treasury were to decide to sell its preferred share investment without Congress having first reformed our housing sector,” he adds, “we would just be returning to a time where gains are for private shareholders and losses are for taxpayers. Neither of these is an acceptable outcome.”

What’s your expectation for the near-term chance that Congress gets something done on GSE reform?

In the meantime, Fannie is making bank. It isn’t unreasonable to expect that the firm might make $100 billion this year. After all, they pulled in about $60 billion in the first quarter alone. That would mean that Fannie’s earnings would be more than the combined 2012 after-tax income of Apple Computer ($41 billion) and Exxon Mobil ($44 billion).

Private for-profit schools are now designing special curricula to increase the chance that they will not be flagged for the 90/10 rule. Corinthian College, a private for-profit that operates Everest system of colleges and universities,  says that it is going to start a new course of instruction known as Quick Start for this specific purpose.

See this excerpt from their most recent 10-K:

QuickStart is a corporate training company that provides short-term instruction to IT professionals on Microsoft, Cisco and other software…We expect to adopt QuickStart’s courses into certain of our existing colleges to provide additional sources of non-Title IV revenue to assist in compliance with ED’s 90/10 rule.

We expect to continue pursuing strategic acquisitions as part of our growth strategy, although in the near term we expect to focus our efforts primarily on opportunities to acquire companies that will help our existing colleges generate additional non-Title IV revenue.

Under the 90/10 rule, private for-profit schools lose the ability for their students to receive financial support from the federal government to attend school. To do so, the school must derive more than 90 percent of its revenues from federal aid sources (Stafford, PLUS, Perkins, Pell Grants, and a few other sources). Corinthian recently reported that 80.1 percent of its revenues come from the US Department of Education.

Sequestration Impacts VA Tuition Benefits: On March 2nd, the Navy announced that new tuition enrollments for US Marines would be suspended. On March 8th, the US Army followed suit. This creates an interesting dynamic for the future of for-profit education. Currently, military benefits are not calculated as federal benefits in the formation of a school’s 90/10 rule percentage. In fact, they are allowed to count as non-federal benefits payments! Bridgepoint, the parent of Ashford University and the University of the Rockies, says that almost one in four of its students are from the armed services.

In a sector where relative differences in competing products can range from bad to really bad, World Acceptance has a payday loan product that uses accounting tricks to mask where its consumer installment loans fit on that spectrum.

World Acceptance keeps the books on its high-cost loans using an unusual accounting (more…)

Only about one-half workers have a job that offers a retirement savings plan. Of that minority, only forty percent choose to participate. Less than seven percent “max out” on their 401 (k).

For people that live to be 65, odds are that they will survive for at least another two (more…)

Fannie Mae is back from the dead, having reported that its quarter-2013-over-quarter-2012 net income tripled.  When coupled with a large gain from a positive development on future tax (more…)