Comments on: UBS is sitting on billions in bad student loans

By: Anonymous

Anonymous — Fri, 15 Jan 2010 07:23:00 +0000

Well, problem with NHHEAF being – that UBS can easily claim the CEO misrepresented himself.

In a 2004 CBS News report, Mr. Rene Drouin, CEO of NHHEAF , was found to have no legitimate or accredited education. Schools Mr. Drouin lists as his “alma mater” have been shut down by state or federal authorities for being unaccredited diploma mills. (Mr. Drouin also claims a law degree from Drexel – the reputable Drexel Univeristy in PA does NOT offer a law degree; however, the Drexel diploma mill in Louisiana that was shut down by Federal Authorities did offer a law degree)

It is quite possible that Mr. Drouin lacked the basic education and sophistication (assuming he was duped by two separate diploma mills on three occasions) to understand the markets and instruments offered by UBS.

By: Edward Harrison

Edward Harrison — Mon, 16 Feb 2009 03:26:02 +0000

@twelve,
I am not making a statement about credit risk. I am making a statement about writedowns of credit, the term used when a company lends money. The holder of a bond is the creditor. Writing down the value of that bond is a credit writedown.

However, your statement is false. Student loans bundled together in the asset-backed securities market are both publicly-issued and private loans. Private loans do not come with a federal guarantee. So, there is, indeed, credit risk in addition to liquidity risk.

By: twelve

twelve — Mon, 16 Feb 2009 02:40:14 +0000

This is not a “credit writedown”. Student loans are 97% to 98% government guaranteed, so there simply is no credit issue with the vast majority of student loan ABS. In fact, unlike just about any other asset class, in many cases literally every single borrower could default and AAA noteholders would get out with full P&I.

So this isn’t a credit writedown. This is a liquidity writedown.