CEO of Sallie Mae Resigns

Matthew Keenan, Bloomberg - May 22, 2007

Sallie Mae replaced Chief Executive Officer Tim Fitzpatrick with C.E. Andrews, its chief financial officer, as the company prepares for a planned $25 billion takeover by a group led by J.C. Flowers & Co.

Fitzpatrick will serve as an adviser in the next few weeks during a transition, Reston, Virginia-based Sallie Mae said today in a statement. Sallie Mae, formally known as SLM Corp., is the largest U.S. student-loan provider.

Sallie Mae on April 16 accepted a buyout offer from J.C. Flowers, JPMorgan Chase & Co., Bank of America Corp. and Friedman Fleischer & Lowe LLC. Sallie Mae faces possible cuts in government subsidies paid to lenders and has been among student- loan providers investigated by New York Attorney General Andrew Cuomo for conflicts of interest in relationships with colleges.

``The Sallie Mae board sought and received assurances from the Flowers group that Mr. Fitzpatrick's departure would not impact their plans to proceed with the acquisition,'' SLM said in the statement. The buyout is scheduled to close by the end of this year.

From Education and Labor Committee Chairman George Miller:

Chairman Miller Statement on Resignation of Sallie Mae CEO

WASHINGTON, D.C. -- U.S. Rep. George Miller (D-CA), the chairman of the House Education and Labor Committee, issued the following statement today on the announcement that Sallie Mae CEO Thomas Fitzpatrick has stepped down.

"Mr. Fitzpatrick's abrupt departure suggests that the lending industry is beginning to recognize that business as usual is no longer acceptable at Sallie Mae or any other company participating in the federal student aid programs. However, while new leadership in the industry is certainly welcome, the fact remains that simply replacing individual executives won't stop the corrupt practices that Congress and state attorneys general have recently uncovered.

"In addition to cleaning up the relationships between lenders and colleges -- as the House recently voted to do -- we must also cut the excessive subsidies paid by the federal government to lenders and use that money to help students and families pay for college. Indeed, the proof that the industry is awash in wasteful taxpayer subsidies can be found in the news, reported by wire services this afternoon, that Mr. Fitzpatrick will leave Sallie Mae with an outsized $4.1 million severance package."