Sallie Mae 2013 Annual Report Download - page 52

the CFPB or one or more state attorneys general or state regulators believe that we have violated any of the
applicable laws or regulations, they could exercise their enforcement powers in ways that could have a material
adverse effect on us or our business.
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 FFELP servicer, negative
publicity and potential legal claims. 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.
Sallie Mae Bank is subject to state and FDIC regulation, oversight and regular examination, including by the
CFPB. The FDIC and state regulators have the authority to impose fines, penalties or other limitations on Sallie
Mae Bank’s operations should they conclude that its operations are not compliant with applicable laws and
regulations. For additional information on regulatory matters relating to Sallie Mae Bank and SMI, as its
servicer, see Item 3. “Legal Proceedings—Regulatory Matters.”
We may be required to make further changes to the business practices and products of Sallie Mae Bank and
our other affiliates, which may lead to additional costs that must be incurred to comply with the terms of any
order.
We have made and, following the Spin-Off will continue to make, changes to Sallie Mae Bank’s oversight
of significant activities performed outside Sallie Mae Bank by affiliates and to its business practices in order to
comply with all applicable laws and regulations and the terms of any cease and desist orders. With respect to
many of the weaknesses attributed to Sallie Mae Bank under the 2008 cease and desist order issued jointly by the
FDIC and the UDFI for weaknesses in its compliance function, the Spin-Off is expected to ameliorate this
condition due to our proposed separation into two, independent publicly-traded companies. However, depending
on the outcome of currently pending actions by the FDIC, UDFI, the Department of Justice (the “DOJ”) and
CFPB, we or Sallie Mae Bank could be required to, or otherwise determine to, make further changes to the
business practices and products of Sallie Mae Bank, its other affiliates and third-party provider relationships
following the Spin-Off to respond to regulatory concerns. Such changes to the business practices and products of
Sallie Mae Bank or our other affiliates in response to current or future regulatory concerns and enforcement, or
other action by the above referenced or other regulators, which may include civil money penalties and require
restitution to customers, could materially and adversely impact our business, financial condition and results of
operations.
Changes in law, regulation or regulatory policy involving student loans could have a material impact on our
profitability, results of operations, financial condition, cash flows or future prospects.
Our businesses are subject to numerous state and federal laws and regulations and 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 FFELP Loan business has been affected extensively by changes in law, most notably by the legislation
Congress passed in 2010 to eliminate new FFELP Loans. Changes in the laws, regulations and policies governing
federal loan servicing or the terms and conditions of existing FFELP Loans could have an adverse effect on our
results of operations, financial condition, cash flows and business prospects.
Our Private Education Loan business may also be impacted by changes in law, regulations or regulatory
policy. For example, the CFPB’s 2012 Report on the Private Education Loan marketplace provided a number of
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