Rep. Maxine Waters (D-Calif.) tried to grill a group of CEOs of large banks during a House Financial Services Committee hearing, but ended up exposing a significant gap in her knowledge.
Waters cited the numbers showing sharp increases in student loan debt over the years, which in many cases has become truly unmanageable for the borrowers. She asked them what they planned to do about the problem.
“Who would like to answer first? Mr. Monahan, big bank?” Waters said to Bank of America CEO.
“We stopped making student loans in 2007 or so,” BoA CEO Brian Monahan replied.
So, Waters went down the line. “Mr. Corbat?” she said to Citigroup CEO Michael Corbat.
“We exited student lending in 2009,” Corbat responded.
Waters still hadn’t caught on, and asked J.P. Morgan CEO Jamie Dimon the same question. Dimon finally explained the situation to her.
“When the government took over student lending in 2010 or so, we stopped doing all student lending,” Dimon told Waters.
Without missing a beat, Waters quickly pivoted to the topic of small business.
What Waters should have known: Before 2010, private banks issued federally-guaranteed student loans that were backed by the government (read: taxpayers) if they weren’t repaid.
Starting in 2010, the Obama administration thought it best to cut out the middle man, so to speak, by having the federal government issue all loans directly.
This would’ve been useful knowledge for Waters to have going into a hearing with bank CEOs. Watch the exchange below: