Word: foxes
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Dates: during 1980-1989
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...Edward A Fox, Sallie Mae's president since the company was formed agrees that the firm was very risk averse during its early years, but with good reason. "When we first started out in 1973, we had no capital no net worth no funds to speak of. We were sort of held together by wax and tobacco juice," Fox says...
When Sallie Mae tried to hold a stock offering in 1973 and got no takers the 46 years old Fox says "the board reached an absolute consensus that in order for this corporation to attract capital, which is important for its social mission we had to have a balance sheet that could encourage investors to want to participate in the corporation. If we couldn't attract capital all the social goals that we had could not be satisfied...
...Over the first five years we grew to be a $500 million corporation, which is relatively small. During that time we were profitable, but by no means really profitable," Fox explains. While Sallie Mae busily built a fairly sophisticated marketing network and financial system, the company also was operating under fairly rigid conservative banking practice...
...balance sheet had become debt heavy Fox says that by 1983, Sallie Mae's capital base had grown to about $100 million while the debt of the corporation was nearing $7.5 billion. "We had a corporation that had 75 units of debt for each unit of capital, which is about four times what most commercial banks have," Fox says...
...Fox says that Sallie Mae recently received an 'AAA' rating for credit worthiness making it one of only three financial institutions in the country with the highest possible rating. This means the company can borrow at lower interest rates and increase its profits handsomely...