Sallie Mae 2011 Annual Report Download - page 20

Our businesses are regulated by various state and federal laws and regulations, and our failure to comply
with these laws and regulations may result in significant costs, sanctions, litigation or the loss of insurance
and guarantees on affected FFELP Loans.
Our businesses are subject to numerous state and federal laws and regulations and our failure to comply with
these laws and regulations may result in significant costs, including litigation costs, and/or business sanctions. In
addition, changes to such laws and regulations could adversely impact our business and results of operations if
we are not able to adequately mitigate the impact of such changes.
Our private credit lending and debt collection businesses are subject to regulation and oversight by various
state and federal agencies, particularly in the area of consumer protection. Some state attorneys general have
been active in this area of consumer protection regulation. We are subject, and may be subject in the future, to
inquiries and audits from state and federal regulators as well as frequent litigation from private plaintiffs.
The Bank is subject to state and FDIC regulation, oversight and regular examination. The FDIC and state
regulators have the authority to impose fines, penalties or other limitations on the Bank’s operations should they
conclude that its operations are not compliant with applicable laws and regulations. At the time of this filing, the
Bank was the subject of a cease and desist order for weaknesses in its compliance function. While the issues
addressed in the order have largely been remediated, the order has not yet been lifted. Our failure to comply with
various laws and regulations or with the terms of the cease and desist order or to have issues raised during an
examination could result in litigation expenses, fines, business sanctions, and limitations on our ability to fund
our Private Education Loans, which are currently funded by deposits raised by the Bank, or restrictions on the
operations of the Bank. The imposition of fines, penalties or other limitations on the Bank’s business could
negatively impact our business, financial condition and results of operations.
Loans serviced under the FFELP are subject to the HEA and related regulations. Our servicing operations
are designed and monitored to comply with the HEA, related regulations and program guidance; however ED
could determine that we are not in compliance for a variety of reasons, including that we misinterpreted ED
guidance or incorrectly applied the HEA and its related regulations or policies. Failure to comply could result in
fines, the loss of the insurance and related federal guarantees on affected FFELP Loans, expenses required to
cure servicing deficiencies, suspension or termination of our right to participate as a servicer, negative publicity
and potential legal claims. A summary of the FFELP may be found in Appendix A “Federal Family Education
Loan Program.” The imposition of significant fines, the loss of the insurance and related federal guarantees on a
material number of FFELP Loans, the incurrence of additional expenses and/or the loss of our ability to
participate as a FFELP servicer could individually or in the aggregate have a material, negative impact on our
business, financial condition or results of operations.
Item 1B. Unresolved Staff Comments
None.
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