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    October 1, 2008  
Sallie Mae;
Arent Fox;

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You might have heard about a little hiccup in the credit markets? Last week we headed to Reston to hear from Sallie Mae GC Mike Sheehan on how it's affecting a subject near and dear to every law grad's heart—the student loan business.

Unlike its sister Fannie, a government sponsored enterprise (until recently anyway), Sallie Mae gave up its GSE charter to become a completely private-sector lender in 2004. A 16-year Sallie vet, Mike was on hand for the GSE charter wind down and, after jumping into the GC post when Rob Lavet stepped away in February, has been on a wild ride since. This spring the mortgage meltdown threatened students' ability to get loans from private-sector lenders, who were unable to find investors in tightening markets, leading Congress to authorize the Dept. of Ed. to provide liquidity. (Congress just extended the program to 2010.)

It's not the only crisis Mike has helped fend off in "the most intense year of my life." After private equity firm JC Flowers backed out of a $25B deal to buy Sallie Mae in late '07, Mike and his team provided legal support for a $2B common stock and $1.2B preferred convertible stock offering in record time, the lion's share in the week between Christmas and New Year's. He calls his 11-lawyer HQ staff (29 company-wide) the leanest and most effective in the nation, but there's plenty of outside work. He turns to Venable (bid protest), Latham (securities class action), Stroock (class actions), Morgan Lewis (401K stock drop suits), McKee Nelson and Cadwalader (funding), Gibson Dunn (SEC investigation and disclosure), and WilmerHale (M&A).

Teaming Up for Financial Institutions

Six multilateral financial institution defendants had the help of a smooth-operating team this summer in a $2.6 billion matter handled by Arent Fox's Jay Hulme (for the Japan Bank for Int'l Cooperation) and Chadbourne Parke's Hwan Kim (for the Import-Export Bank of Korea). Bingham (Bank of Japan), Sidley (World Bank), White & Case (IFC), and Davis Polk (IMF) also worked the case, but Hwan's balcony only holds so many. The action, filed in the Federal District of DC, stemmed from a default judgment that 260 plaintiffs had won in 1997 against Iran for damages from the 1983 bombing of a Marine barracks in Beirut.


Executing the judgment against Iran proved harder than getting cash from a WaMu ATM, so the plaintiffs' attorney sought to seize Iranian assets allegedly held by the defendants. Hwan and Jay emphasize their sympathy for the plaintiffs, but their clients aren't depository banks and had no Iranian accounts. The plaintiffs' lawyer made things a challenge, but Hwan says defendants turned a corner when they asserted a common interest privilege to share strategy and thoughts on briefs. Jay's Arent Fox's team, the first slammed with a wave of plaintiff's motions, did initial heavy lifting. The case got dismissed, but these two retain their impressive team spirit and insisted on a joint interview.

Best Party of the Week . . .

.goes to the National Black Law Students Association's Fifth Annual Congressional Black Caucus reception at Reed Smith on Friday. You only get a glimpse here, but hundreds of students from Oregon to Maine packed the firm as part of the festivities surrounding the CBC's two-day Legislative Conference. Lawmaker guests were still working on the Hill when we showed (busy night—we heard there was a debate on TV). Tyree Jones, Reed Smith's Director of Global Diversity, made it to the podium even though he's busy on the mortgage fallout, too—representing financial institutions in multiple fair lending cases.

John Ford is Bisnow's Legal Editor. Shower him with story ideas at

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