We're running out of federally chartered companies to be questioned about their accounting methods. Freddie Mac
Now, the Securities and Exchange Commission is investigating student loan giant SLM
Sallie Mae was a federally sponsored company until 1997, when its shareholders approved severance from the federal government. The company provides education loans to students, including adults, but it now competes with banks and specialty lenders such as Student Loan Corporation
Is there any way to react to this? Some investors take the approach that an SEC investigation means an automatic "sell." Certainly, such a policy will protect investors from the sting of initially disclosed problems expanding into something larger, a la Enron or WorldCom. On the other hand, at this point in time we're talking about what looks like a procedural issue that does not involve nearly enough money to come close to impacting the overall quality of Sallie Mae's financial statements. Investors would be well-warned to keep an eye on developments here, but I wouldn't run for the exits based on the facts that are publicly known at this point in time.