Wednesday, November 11, 2009

Did Hell Just Freeze Over? Never Mind



I almost dropped to the floor when I read that the ABA (the American Biglaw Association) was actually confronting reality and addressing the issue of crushing student loan debt head-on. When I actually read what they were proposing, however, it didn't take long to realize what they were really up to:

"The move would help the private loan providers, too, by helping borrowers to pay off their loans when otherwise they might default, Lamm added. 'The [private loan providers] should like this plan because otherwise there is a bankruptcy bath waiting in the wings,' she said."

It seems like Richard Matasar and his crony ilk in the Access Group are in over their heads and need a bailout. With the recent creation of the Income Contingent Repayment plan (ICR), what we would essentially be doing by converting private loans into federal ones is socializing the risk of worthless TTT law degrees and putting on the backs of future American taxpayers millions of dollars in guarantees in worthless triple rated "TTT" junk bonds. I say no way.

What we really need:
1. Create transparency and standardization in the publication of law school post-graduate career statistics.
2. Reallow private student loans to be discharged under the federal bankruptcy code. If Access Group can't underwrite credit worthy loans, they should go out of business.
3. Disallow law school deans from serving as CEOs of private lending companies. Clear conflict of interest.

That is all.

http://www.theposselist.com/2009/11/11/aba-proposes-law-student-loan-relief/

54 comments:

Angel said...

AGREED! I blogged on this too. Shocking at first, but horribly predictable.

Anonymous said...

Obama can waive his magic wand and solve any problem. "Yes He Can!"

Anonymous said...

The Access Group hadn't even heard of this yet? Why did they have to go out of their way to point this out? Something smells fishy here.

Anonymous said...

If the ABA really wanted to help America's unemployed and under-employed attorneys, they'd stop (1) accrediting so many unnecessary law schools and (2) condoning the outsourcing of legal work to India.

Anonymous said...

Why are private loans not subject to bankruptcy laws? ? When looking for an answer, I am not interested in libertarian theory about how governments should work or racist diatribe. I mean what practical reasons did they give for this special treatment for private debt? The tax payers are not footing the bill to subsidize these loans. Therefore, they should be treated like all other creditors in bankruptcy court.

Anonymous said...

Because corporate america is looking to create a neoslave work force right here in the homeland.

Anonymous said...

The lenders may as well control all the bar associations. Either directly or through the big law law firms who they are the clients of.

Barron's has an article this week headline "Education sinkhole". It basically says many people think private colleges are a waste of money. Which they are. Except for two year tech and engineering.

The government is awash in debt. They will never bail out this law school financial situation.

Anonymous said...

The ABA is a thieving failed organization that screws over rather than helps its members. Its fucking them up the tusch.
And then saying: They (other people) have to do more pro bono work. More free work is what is needed.
ABA drop dead!

stupdworld said...
This comment has been removed by the author.
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Anonymous said...

More showboating from the ABA. They know nothing will ever come of this, but they do it anyway. Like Obama is going to bail out the lawyer scam when his approval rate is falling and when he is being criticized for the Wall Street bailouts left and right. This is all an act by the ABA to give the false impression that they are actually doing something, which they aren't. Meanwhile, they are about to accredit a million more crap schools and are green lighting more work to India.

Anonymous said...

I found a document review! The catch is that it is in India and you have to speak Portugese. ROFL!

Portuguese Document Review in India

--------------------------------------------------------------------------------
Date: 2009-11-10, 6:11PM EST
Reply to: job-8px9t-1460296126@craigslist.org [Errors when replying to ads?]

--------------------------------------------------------------------------------


Portuguese speaker needed for document review for internal investigation.

Prior document review experience required. Must be fluent in business Portuguese.

Review is expected to last several weeks and will take place in India. You will need to leave around November 20th. Rate is $40/hour + OT, 50 hours per week. Visa, flight, hotel, transportation and meals included.

Anonymous said...

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Anonymous said...

The ABA Committee members generally are filled with BIGLAW partners, many of whom have seen their own firms implode and have helped in the decision-making to cut 100s of their own associates. These partners probably have children crushed by this attorney depression, and simultaneously seen their individual investment portfolios cut by 60% e.g. can't help their kids financially. They also may have had to kick in their own funds from personal assets to their law firm partnership kiddy to keep it afloat. SO, as it is beginning to hit home, and their own pocket book, NOW they are finally willing to do something about it. What about all of the law school grads who hit the street in early 1990s? Not even a blink...and that recession was considered by most to be worse than now. Where was the ABA then? In fact, they just contributed to growing the problem we now have of too many graduates from law school, too many law schools, too many incompetent attorneys not classically trained academically that you wouldn't let lose to handle a client matter or meet a client. The ABA misses the entire point. What a sham, just throwing the burden on someone else, without having to make a decision nor contribute to a real solution, yet just sit on their partnership profits making an appearance the problem is being solved....pretty slick lawyering isn't it.....just a cover-up. No accountability. Dumping it elsewhere, and hiding as far away from the problem as possible. Yes, it must be a lawyer.

Anonymous said...

I am curious at to Emily's take on all of this.

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Anonymous said...

It's just a back door way of guaranteeing private loans. What an outrage!

So the fatcats get bailed out BEFORE the inevitable tsunami of law school student defaults. So now the taxpayers are on the hook!

What a bunch of assholes. I wish they would let the "free market" dictate and allow the kids to default and put these money grubbing loan companies out of business.

This action by Obama and the ABA will only allow the bubble to float into the future for someone to deal with in the future.

If the cheap money ended, law school applicants would plummet, schools would close and we'd have a manageable number of grads each year. And they would (gasp) actually have a shot at a decent job.

Of course then they would just ship the rest of the work to India, because the actual licensed attorneys are not permitted to have ANY bargaining power.

The ABA has got to go!

Anonymous said...

It's interesting that attorneys involved in litigation are held to very high standards when it comes to conflicts of interest....and yet law school Deans and fiancial aid adminstrators are not held to any standards when it comes to their conflicts of interest with private lenders.

There was one case last year where a law school was steering all fin aid applicants to a certain private lender, depsite the fact that its terms were not as good as ome other comapnies. Litigation showed that there was an agreement betwen the law school and the priavte lender to do this.....and yet this conflict was not disclosed to law students!!

Anonymous said...

Guess who most New York Law School students got most of their private lending from? Surprise, surprise. The same dean who blew all the endowment money on the Madoff gambling wheel.

Trailer Tom said...

Fuck Emily. She is an Alley Cat. You are better off consulting me. That bleached blonde knows nothing - I taught her everything.

Anonymous said...

DOWN WITH RICHARD MATASAR!! DOWN WITH NEW YORK LAW SCHOOL!!

The Yuppie Attorney said...

The unregulated free market Capitalism s*cks when you on the pointy end of the stick.

Anonymous said...

What's going on???? Where's everyone???Does everyone have the SWINE FLU??Is everyone at TOWN HALL MEEETINGS?? Is everyone working on the economy at the FED??? Where is everyone??? What's going on??? Am I the only one sitting at home in my underwear????

Anonymous said...

Everyone is sitting at home waiting by the phone and being jerked around by Skadden again.

Anonymous said...

Mama's don't let yer babies grow up to be lawyers! Even the NYTImes is onto the law school scam now.

http://economix.blogs.nytimes.com/2009/11/12/law-school-as-an-investment/

Sonia said...

Did anyone hear about the status of the Skadden gig? I am due to start tomorrow, and Elle won't pick up her phone. My husband confessed that he is in love with another woman and I need to get out of the house to clear my mind.

Stupid Sexy Flanders said...

One of the problems is that even private loans are backed by the federal government.

Where's the guy who keeps harping on how the federal govt should stop backing law school loans? Is it Nando? Or some other guy?

Well, whoever it is, he should elaborate.

Regardless of whether the law student defaults under a federal loan or the private loan, the federal govt winds up eating up the cost.

Incidentally, this is probably one of the reasons why other debt, be it secured or unsecured, is dischargeable in bankruptcy, but student loans not. The federal govt is not on the hook for credit card debts or underwater home mortgages or whatever. They ARE on the hook for defaulted student debts, even if originally from a private lender.

Anonymous said...

Word on the street is that the gig you referenced started today.

Sonia said...

While I was coding at Labaton, my husband was out poking that bimbo. This is the thanks I get.

Anonymous said...

Sorry to hear that Sonia. What a cad. Nice picture though. You need to start hurting him - in non-criminal ways. Mix some laxative in his water, put itchy powder in his underpants, give him the swine flu - stupid stuff like that that will not kill him but make his life miserable on a daily basis. We all want to kill these bastards but that will just land you in jail with butch lesbians - although from your picture you might be safe.

Whose Elle - is it that model from Clutch??

David said...
This comment has been removed by the author.
Liz said...

Dude. Check out Higher Education Law blog, or just google FFEL, you'll be surprised.

We already paid for almost all the loans out there. The taxpayers advanced the loan principal. The banks collect the interest and own the outstanding loan, which is now an asset. And the government will have to pay most of the loans in the event of default. The bank can then still sell the loan, because it can't be discharged in bankruptcy.

You're right to be cynical, but there's an important detail you're missing. We already bailed out the banks.

Liz said...

"It's just a back door way of guaranteeing private loans. What an outrage!"

How do you not know? We already guarantee most private loans. Google FFEL for more details on the private loan programs, but basically: The government advances the principal. The bank handles the paperwork and keeps the interest from the income stream. The student pays.

It's as stupid and blatantly ridiculous as it sounds.

They started the program when there were very few private loans out there. Then tuition sky rocketed, and, well, now there are a lot more private loans out there.

Liz said...

One more way to put it:

The government pays the bank.

The bank pays the school (with the government's money).

The student pays the bank.

If the student can't pay the bank, the government pays the bank.

Dumbest plan ever. Blame Sen. Ben Nelson for the fact that this hasn't been fixed. There's a bill to end it in the senate.

Anonymous said...

What percentage of loans are FFEL? That would be an interesting figure to know. I know in years past that a lot of these private loans were securitized and sold off to private investors without gov't backing. When the credit markets dried up back in '07, it would make sense that FFEL would have to pick up a lot of the slack. Regardless, it is all the same issue. Mounds of cheap credit that led to rampant tuition inflation.

Anonymous said...

what needs to happen is all of these loans need to be erased on the basis of fraud an deceptive trade practices, and the lenders need to go to jail, as do the law school officials.

Anonymous said...

Wanna revitalize Coney Island? gass the project dwellers & get rid of the trash, damn cellulite ridden ghetto public assistance wishful abortions..this country has gone to hell, close the borders already

Anonymous said...

The ABA wants your opinion of outsourcing. From the PosseList,

"It wasn’t that long ago --- just back in August 2008 --- that the ABA changed its rules to allow the outsourcing of American legal work. In the midst of the recession, and a credit crunch, with hundreds of contract attorneys not working (or working at sub-rates) along comes to the ABA asking its lawyers to share their opinion on outsourcing. This week’s ABA Intellectual Property Law section e-letter contains a link to a very interesting survey. Here’s the full story from the Above the Law website:   http://sn.im/t7laj"

Anonymous said...

The TTTs are going to go down if something doesn't change, and they've finally realized it. Keeping doc review in this country is the only thing that will keep these toilets in business. The TTT administrators can keep cooking the books, ship their grads straight to the doc review gulags, the next crop of lemmings rushes in, and the party continues. Ideally, they should repeal the outsourcing rule AND de-accredit all TTTs, but given who runs the ABA that's not going to happen.

Anonymous said...

Well, everyone please follow the link above and leave your comments for the ABA. This may the only chance for all of you doc reviewers who have had your jobs exported to India to have your voice heard.

Act fast, I'm sure this survey will be shut down as soon as they get a whiff of the anger out there.

Anonymous said...

License? License? We don't need no stinkin licens! Just go to India to practice "law". Its an easy way to skirt American laws. Who know what they do in those sweatshops.

We don't need no stinkin' license!

Liz said...

"What percentage of loans are FFEL?'

It's really hard to get accurate figures, since there's a little shell game going with the subsidies, but in 2007-8 the program lent $54 billion, yes, $54,000,000,000, to a group that was about 80% of all college students. I think for grad students it's more like 100%, since FFEL kicks in to cover the difference between direct federal loans and tuition, and as we all know, law school tuition is absurdly high.

Anonymous said...

JUNK BONDS!!!!!

NEW YORK--(Business Wire)--
Fitch Ratings has affirmed, removed from Rating Watch Negative, and assigned
Stable Rating Outlooks to the outstanding ratings for all notes under the Access
Group Inc. (Access Group) series 2005-B trust.

The affirmations follow a review of the collateral performance that involved the
calculation of loss multiples based on the most recent variables. Because the
underlying private student loans, unlike Federal Family Education Loan Program
(FFELP) loans, do not carry a guarantee by the government to cover losses, loss
multiples were a critical factor in evaluating the risk level in the deal. The
affirmations reflect sufficient loss multiples for the relevant rating
categories. The Stable Outlooks are assigned despite Fitch's negative view of
the private student loan sector in general because of high loss multiples and
stable loan delinquency levels.

Liz said...

So, yeah. Anyone stupid enough to loan their own money to unemployed law students just took a bath, and now the taxpayers are about to get hosed.

Incidentally, one of my loans is Access, and my understanding is that government wasn't paying the interest, but they still backed the principal. Not sure though, would have to read the law and the loan papers again.

Anonymous said...

What's going on???? Where's everyone???Does everyone have the SWINE FLU??Is everyone at TOWN HALL MEEETINGS?? Is everyone printing money at the FED??? Where is everyone??? What's going on??? Am I the only one sitting at home in my underwear????

Anonymous said...

Everyone is working. An idle worker is a dangerous thing. Just ask Marie Antoinette.

Anonymous said...

Instead of sending doc review work to India, they should send it to the barrio, yo...

http://www.homies.tv/

(You have to let the song load...)

DOC WORK FOR RAZA!!!

Hopeless NYLS Grad said...

At this point, I would gladly trade in my NYLS degree and licenses to practice law for a full discharge of my massive student loan debt. They can even keep the portion I've already paid back during the time I've worked in doc review. We can forget this all happened and I can start over.

Liz said...

"putting on the backs of future American taxpayers millions of dollars in guarantees in worthless triple rated "TTT" junk bonds. I say no way."

The government already guarantees the private loans. There's no future putting on the backs. It's on the backs, and it's been there for some time.


If you default on your private loan, the government pays. I don't know how much taxpayers are expected to pay in the next couple years, but I think it could be something like $200 billion. Then a private guaranty agency goes after you, and keeps a bunch of fees as payment. The agency gets paid before the government. The government might bget back 4 or 5 % of its original investment.

I think it's kind of cute that someone as suspicious as the writer on this site still thought that maybe taxpayers weren't yet being hosed by student loans, thought there might be a way to avoid paying for the loans in the future.
Unfortunately, that's not the case. Taxpayers are about to pay out a substantial amount for every subprime idiot law school administrator who overcharged, and every unemployed lawyer who was funneled through the system.

Anonymous said...

Mamas Don't Let Your Babies Grow Up To Be...Lawyers http://bit.ly/2soV2Y

Anonymous said...

Can someone tell me how all these "law schools" that aren't part of a university started?

I mean, we have New York Law School, Brooklyn Law School, etc. And in California there are like 100 law schools starting with bigger ones like Southwestern "University", in LA, Cal Western and Thomas Jefferson in SD, Golden Gate in SF, etc. that aren't really part of universities or colleges.

How did all these bogus, phony diploma mills start?

I guess at one time it was really lucrative for a bunch of egomaniacal attorneys with delusions of professorship and deanhood to get together, raise a little cash, buy a building, recruit a bunch of loser dorks and nebbishes from Scarsdale and Weekhauken and East Orange and Staten Island, who couldn't get into real, prestigious universities, purchase a bunch of wood pulp wholesale on the commodities exchanges, and start running the printing presses nonstop 24/7, cranking out law diplomas as if they were toilet paper.

And maybe they are toilet paper by now. By now, word has gotten 'round that the LargeLaw firms are keelhauling their pampered Ivy-League (T14), Semi-Ivy League (Tier One), and Pseudo-Ivy League (Tier Two) associates, sending them on extended "sabbaticals" to teach Andean villagers in Peru and Tibetan monks English and how to wipe their asses, so the value of all these people's law degrees has plummeted like a naked, greased Rush Limbaugh sliding down Mount Fuckwad.

With that deflation, whaddaya all think the value of degrees from places like NYLS and BLS now are? Prolly worth about as much as seat on the Bangladeshi Turd Exchange.

Anonymous said...

The ABA scheme is totally a bailout of the student loan industry, but it could help students as well. As it stands now I have about $175k in debt and 25 years left to pay everything off. My monthly payment is $1250, and I barely get by paying that. My federal loan portion is about $700 of that. I wouldn't qualify for the Income Sensitive Repayment because my federal loan payment would actually go up to $750 a month and I only have 25 years left anyway. However, if I could convert all my private loans to federal loans, that $1250 a month would get reduced to the $750 a month, so I'd save $500 a month. $500 a month would go a long way towards saving money so that I don't end up on the dole when I'm an old man. And with some added financial flexibility I could get out of the contract attorney market and make a run at getting into another field since law isn't panning out.

Anonymous said...

WHATS GOING ON HERE????

I will tell you:

1. ACCESS GROUP ET AL are scared shitless that somebody will sue the ABA or THE LAW SCHOOL CARTEL for "Actively mispresenting" their employment stats. When that somebody wins based on "detrimental reliance", they will be relieved of all student debt.

2. Access Group, the Law school cartel, and the ABA will now be held responsible, and NOT the law students.

3. SO, they want to get out of it before it happens. If the federal gov't converts these loans, access group gets PAID and they don't have to worry.

WHERE ARE THE ETHICS?
PROFESSIONAL RESPONSIBILITY?
A STRIVING "TO DO THE RIGHT THING"?

Nobody gives a shit anymore in this dog-eat-dog world, unfortunately not the law schools nor the ABA, and thats the truth.

IF its not the truth, then call me out on it. Take me to court and prove me wrong. Fuckers.

Anonymous said...

December 14, 2009: 'For-profit colleges have higher rate of student loan defaults'

http://www.usatoday.com/news/education/2009-12-14-student-loan-default_N.htm