Risk & Compliance

Student-loan Execs Placed on Leave

New York attorney general is looking into possible payments by student-loan companies to university financial-aid officials who steer business thei...
Stephen TaubApril 9, 2007

CIT Group announced that it has placed three senior executives at its Student Loan Xpress subsidiary — vice chairman Robert deRose, chief executive officer Mike Shaut, and president Fabrizio Balestri — on administrative leave.

Randall Chesler, president of CIT Consumer Finance, will assume interim oversight of Student Loan Xpress, which was acquired in 2005.

The management changes follow a recently announced investigation by New York Attorney General Andrew Cuomo. According to Reuters, Cuomo is looking into possible payments by student-loan companies to university financial-aid officials who steer business their way.

Specifically, Cuomo’s office told the wire service, the attorney general is investigating stock grants by Education Lending Group, the former holding company for Student Loan Xpress, to financial-aid officers at three major U.S. universities.

“As a company that holds itself to the highest standards of business ethics and integrity, we take the allegations raised by New York Attorney General Cuomo very seriously,” said Jeffrey M. Peek, CIT’s chairman and CEO, in a statement. The company will continue to cooperate fully, he reportedly added.

“I don’t think this is really going to have a material impact on their operations, but the message they’re trying to get across is, they’re taking any kind of corporate governance issue very seriously,” David Chiaverini, an analyst at BMO Capital Markets, told the wire service.