[Congressional Record Volume 143, Number 125 (Thursday, September 18, 1997)]
[Extensions of Remarks]
[Page E1794]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




               BILL REGARDING SALLIE MAE BOND REFINANCING

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                          HON. DAVID E. SKAGGS

                              of colorado

                    in the house of representatives

                      Thursday, September 18, 1997

  Mr. SKAGGS. Mr. Speaker, today I have introduced legislation to 
correct an unfair practice that is occurring as a result of the 
privatization of Sallie Mae.
  While Sallie Mae was a Government-sponsored enterprise, it purchased 
tax-exempt municipal bonds issued by public colleges and private 
universities. Now that Sallie Mae is being privatized, it has adopted a 
policy of allowing its clients to waive the redemption premiums for 
those bonds, but only if the clients use Sallie Mae's private 
subsidiary as an investment banker for the transaction. I would have no 
objection to this business practice if the bonds in question were 
acquired after privatization. However, having acquired the bonds as a 
Government-sponsored enterprise, Sallie Mae has an advantage that 
private investment bankers cannot match. The tie-in requirement to 
qualify for this sweetheart arrangement, which no private competitor 
can match, is simply unfair.
  The legislation I introduced today would prohibit Sallie Mae from 
conditioning the waiver of redemption premiums related to pre-1997 
bonds on the use of its subsidiary, so that all broker-dealer firms can 
have the same opportunity to compete for the business of handling 
refinancing of Sallie Mae securities.

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