During a House Financial Services Committee hearing with “megabank” representatives, Chairwoman Maxine Waters (D-Calif.) got a lesson on the student loan crisis in the United States after she attempted to place the blame on big banks.
Several of the largest banks in the United States had representatives present to discuss the recovery and sustainability of the financial system in the United States one decade after the 2008 recession.
At one point during the hearing, Waters tried to tie the current student loan crisis to big banks, asking those present to explain what they’re doing to help student borrowers. To Waters’ surprise, none of the banks she questioned had any part in financing student loans, largely because the government took that over.
Watch the video below:
“Today, there are more than 44 million Americans that owe — there’s a student loan crisis. $1.56 trillion in student debt. Last month, this committee received testimony that, last year, 1 million student loan borrowers defaulted, which was on top of the 1 million borrowers who defaulted the year before. What are you guys doing to help us with the student loan debt? Who would like to answer first?”
None of the bankers stepped forward to answer because none of them were involved in student lending. Waters was forced to call on Brian T. Moynihan, the CEO and chairman of Bank of America.
“We stopped making student loans in 2007 or so,” Moynihan explained, catching Waters off guard.
Michael L. Corbat, the CEO and chairman of Citigroup, noted that his bank exited in 2009.
Jamie Dimon, the CEO and chairman of JPMorgan Chase, put an even finer point on his answer, directly pointing to government intervention as his bank’s reasoning for abandoning student loans.
“When the government took over student lending in 2010 or so, we stopped doing all student lending,” Dimon explained.
As the bankers noted, the U.S. government largely took over student lending and, under former President Barack Obama, they added approximately $1 trillion to the total U.S. student loan burden.
It looks as though there is a monolith who is responsible for giving students loans they cannot afford to pay back, it just isn’t the banking industry — it’s the government.
Please note: This is a commentary piece. The views and opinions expressed within it are those of the author only and do not necessarily reflect the editorial opinion of IJR.