California Rep. Maxine Waters opened her big fat gob yet again Wednesday, only to shove her foot right in it, as per usual.
During a congressional hearing on big banks, Waters, who chairs the House Financial Services Committee, grilled several bank CEOs over what their institutions were doing to help solve the student loan crisis amid rising student loan debt and an ever-increasing number of annual defaults.
There’s just one problem – Waters never bothered to learn whether the banks she was questioning actually offer student loans at all.
And she probably should have.
As any halfway competent House Financial Services Committee chair should know, back in 2010, President Obama pretty much cut many private banks out of the student loan business altogether. In a massive program overhaul, the Health Care and Education Reconciliation Act eliminated private banks as middle-men in providing government-backed loans to college students, while also expanding Pell grants. The theory was that students could get their loans directly through the government and pay it -- i.e., the taxpayers behind the loan - the fees and relatively low interest rates they'd otherwise have paid the bank.
But even before that, many banks had already been getting out of the private student loan business on their own, recognizing that it simply wasn’t very profitable and the default rate was escalating (two problems that ultimately weren't solved once the government stepped in). In 2008, for example, Bank of America stopped offering private student loans altogether, focusing instead on offering the more secure government-backed loans before the 2010 new law ousted them from that process as well.
And, while some banks and loan companies still offer private student loans (like Sallie Mae and Wells Fargo), that number is far fewer than it used to be. In fact, of the roughly $1.5 trillion or so in student loan debt currently floating around out there, the government itself owns more than $1 trillion.
Given this basic history, the exchange between Waters and the bank CEOs at Wendesday's hearing becomes even more ridiculous.
"Today, there are more than 44 million Americans that owe - this is the student loan crisis - $1.56 trillion in student loan debt," Waters launched head-first. "Last month, this committee received testimony that last year, more than 1 million student loan borrowers defaulted, which is on top of the 1 million borrowers who defaulted the year before."
“What are you guys doing to help us with this student loan debt? Who would like to answer first? Mr. Moynihan?” she then demanded.
“We stopped making student loans in 2007 or so,” Bank of America CEO Brian Moynihan answered, clearly a bit confused.
“Oh, you don’t do it anymore. Mr. Corbat?”
“We actually ended student lending in 2009,” the Citygroup CEO responded. (By then, a few chuckles had started.)
“Mr. Dimon?” Waters plowed on down the line.
“When the government took over student lending in 2010 or so, we stopped doing student lending,” JP Morgan's CEO said.
After that, Waters gave up and moved on to her next question.
In fact, the whole thing was so cringe-worthily awkward, it’s nearly impossible to watch - unless, of course, you find Waters’ total ignorance of her own committee’s issues hilarious….
…that is, until you consider that she’s the elected lawmaker who chairs the whole committee.