SEIU Report on Nova Student Loan Program Sparks Concern and Underscores Need for Transparency

MIAMI--(BUSINESS WIRE)--A report released today by SEIU unveiled concerns with Nova Southeastern
University’s loan practices that involve
potential conflicts of interest, including many of the same concerns
currently being investigated by the New York Attorney General at other
universities, including a Nova financial aid call center run by a
private lender and additional bureaucracy for students who wish to use
non-preferred lenders.

CONCERNS:



Nova law school dean Joseph D. Harbaugh sits on the board of directors
of Access Group, one of the school’s
preferred lenders. A 2001 report by Harbaugh discussed how he brought
in the Access Group as a consultant for law students to discuss
budgeting and debt, with the goal of keeping student debt down.


As identified in the Miami Herald, Sallie Mae runs a Nova student loan
call center. Sallie Mae also appears to run Nova’s
graduate student loan website. Although the webpage has the NSU logo
and Office of Student Financial Assistance web banner at the top of
the page, the site is run through the Sallie Mae “e-fao.com”
site and says “powered by Sallie Mae”
in the lower right corner.


Students who wish to use a lender other than one on the preferred list
must complete additional paperwork. Nova’s
Guide to Student Financial Aid cautions students that choosing a
lender not listed on Nova’s preferred list
may result in a longer processing time.


Carl Buck, the Vice President of Peterson’s,
a subsidiary of Nelnet, presented a free seminar to Nova students on “The
Secrets of Financial Aid” in Fall 2006.

Nova should take this opportunity to be more transparent in how it
structures its student loans. The Florida state Attorney General has
started an investigation of Florida state schools and is calling on
universities across the state to sign an agreement to manage loans
without conflicts of interest.

A report released today unveiled concerns with Nova Southeastern
University’s loan practices that involve
potential conflicts of interest. SEIU researchers uncovered the
worrisome report on Nova’s student loan
practices as part of the growing concern over Nova’s
commitment to the community, as more than 100 low-wage service workers
were turned away from their jobs after forming a union.

New York Attorney General Andrew Cuomo started investigations into the
relationship between colleges and lenders nation-wide, revealing that
preferred lender lists can increase costs for students.

Japan's Bank Lending Slows as Companies Shun Debt (Update5)

Japan's lending growth slowed for a
third month as cash-rich companies ignored the lowest borrowing
costs among major economies and used their own funds to invest.

Loans excluding trusts rose 1 percent in April from a year
earlier, the Bank of Japan said in Tokyo today, slowing from 1.1
percent in March. Lending adjusted for currency fluctuations, bad
loan write-offs and securitizations climbed 1.9 percent.

Lending has risen less than 2 percent in each of the past nine
months as companies including Toyota Motor Corp. and Canon Inc.
shun the use of debt for expansion, instead using money generated
by the longest stretch of profit growth in 36 years. Borrowing is
unlikely to accelerate in coming months, said Takuji Aida.

``Companies have ample cash and that reduces their need to
borrow from banks,'' said Aida, chief economist at Barclays Capital
in Tokyo. ``The extra liquidity is more a reflection of strong
business activity.''

The yen traded at 120.21 per dollar at 5:11 p.m. in Tokyo
compared with 120.17 before the report was published. Bank lending
including trusts climbed 1 percent in April, the same pace as the
previous month, the central bank said.

Japan's banks began to increase lending in February 2006,
having disposed of bad debts accumulated after the bubble economy
burst 16 years ago. Growth in borrowing has slowed since peaking at
2.2 percent last July, the same month the Bank of Japan ended its
five-year policy of keeping interest rates near zero percent.

BOJ's Fukui

Loans excluding trusts were 388 trillion yen ($3.2 trillion)
in April, down from the record 537 trillion yen in March 1996.

The bank doubled the key overnight lending rate to 0.5 percent
in February. Governor Toshihiko Fukui's policy board will keep
borrowing costs on hold at its next meeting on May 16-17, according
to all 29 economists surveyed by Bloomberg News.

Interest rates are ``very low'' given the economy's strength
and failing to increase borrowing costs could cause overinvestment,
Fukui said in a speech to business leaders in Tokyo today.

Fujio Mitarai, chairman of the Japan Business Federation, said
he's ``not uncomfortable'' with the country's interest-rate levels.
``There's no great demand for financing'' among Japan's companies,
Mitarai, who is also chairman of Canon, said on May 7.

Canon, the world's largest maker of digital cameras, posted a
record profit last quarter. Toyota, the world's largest automaker
by market value, said yesterday that profit rose 8.9 percent in the
three months ended March 31.

Largest Banks

Growth in lending last month was dragged down by the country's
largest banks, while loans offered by regional banks accelerated.

Lending by Japan's 10 mega banks contracted 0.3 percent in
April from a year earlier, after rising 0.1 percent in March, the
report showed. Regional banks' loans climbed 2.4 percent, faster
than the 2.2 percent growth the previous month.

``Growth in loans has been driven by regional banks lending to
consumers and mid-sized companies,'' Takamasa Hisada, the Bank of
Japan's deputy director of bank surveillance.

An index of demand for loans from companies fell to 9 in April,
the lowest in more than a year, from 14 in January while that of
consumers rose to 13 from 7 in the same period, the Bank of Japan
said in a quarterly report last month.

Lack of loan demand is forcing banks to keep their borrowing
rates low, reducing interest income, said Tomoko Fujii, a senior
economist and strategist at Bank of America N.A. in Tokyo.

Sumitomo Mitsui Financial Group Inc., Japan's third-biggest
bank by assets, said last month full-year profit fell 36 percent,
worse than its forecast.

Other economists have a different view on the stalled growth
in loans.

`Sick of Borrowing'

``Companies are so sick of borrowing,'' said Richard Koo,
chief economist at Nomura Research Institute Ltd. They're slowly
regaining confidence to borrow after repaying debt amid a decade of
economic stagnation. ``This may take a while,'' Koo said.

The collapse of the bubble in the early 1990s triggered a
slump in stock and land prices, leaving companies laden with debt
and smothering demand for loans. Banks, which had secured loans
with land, became reluctant to extend credit, plunging the economy
into more than seven years of deflation.

Interest-bearing liabilities held by Japanese companies have
fallen to about 80 percent of gross domestic product, the lowest
since 1970, from more than 125 percent of GDP in the mid-1990s,
according to Merrill Lynch & Co.

Japan's money supply, or M2 plus notes in circulation, rose
1.1 percent in April, the central bank said in a separate report.
Broad liquidity, which includes bonds and investment trusts, gained
2.6 percent.

Savers, taking advantage of higher interest rates, have been
shifting money from current accounts to time deposits since the
central bank increased borrowing costs in July. Time deposits grew
3.7 percent in April and funds in current accounts dropped 1.3
percent, the bank said today.

``We expect a continuing shift from current accounts to time
deposits, as the impact of the additional rate hike in February
works through the economy,'' said Chiwoong Lee, research assistant
at Goldman Sachs Japan Ltd.

To contact the reporters on this story
Toru Fujioka in Tokyo at

Morgan Stanley Hires Carlos Oyarbide as COO for China (Update3)

Morgan Stanley hired former Credit
Suisse banker Carlos Oyarbide as chief operating officer in
China to help expand in the world's fourth-largest economy.

Oyarbide, 48, will be a managing director, reporting to Wei
Christianson, chief executive officer of China. He will start in
July, Morgan Stanley said in a press release.

Morgan Stanley, the second-biggest securities firm, has
sought to expand in emerging markets to cut its reliance on the
U.S. In China, it won rights to apply to offer yuan-denominated
services and mortgage-backed securities last year when it bought
Nan Tung Bank, based in the southern city of Zhuhai.

Overseas banks are accelerating expansion in the world's
fastest-growing major economy after the nation opened its
banking industry in December. Morgan Stanley has stepped up
hiring since last year after it slipped behind UBS AG and
Goldman Sachs Group Inc. in share sales and takeovers in China.

The firm last week appointed chief economist Stephen Roach
as Asia chairman to lead a drive to arrange more takeovers and
stock sales in the region. In April, it hired Blair Pickerell to
head its investment funds unit in Asia. As head of HSBC Asset
Management (Hong Kong) Ltd., Pickerell had helped set up a China
fund-management venture with Shanxi Trust & Investment Corp.

Recent Hires

In the past two months in China, Morgan Stanley has hired
Guy Cui as managing director from HSBC Holdings Plc, Daniel Qiu
and Jerry Tse from Deutsche Bank AG and James Nien from JPMorgan
Chase & Co.

Oyarbide resigned as head of Credit Suisse's financial
institutions group in Asia excluding Japan last month. Before
joining the Zurich-based bank in 2003, he worked for Morgan
Stanley for 10 years, mostly based in Europe and including an
assignment in Hong Kong from 1999 to 2000. He graduated from the
Wharton school of business in 1983 and held posts with UBS AG
and management consultant firm Mckinsey & Co.

``I am delighted to welcome the return of Carlos, whom I
have known and respected for many years,'' Christianson said in
the release. ``Carlos's diverse experience and strong China
exposure position him well for this important role.''

Former Colleagues

Christianson had been a colleague of Oyarbide at Credit
Suisse and Morgan Stanley. She resigned as chairwoman of Credit
Suisse's investment banking unit in China in 2004, and was hired
by Citigroup Inc. to head the China investment banking team in
September the same year before rejoining Morgan Stanley last
year.

Morgan Stanley ranks second this year in advising on
overseas share sales by Chinese companies, up from 10th in 2006,
according to data compiled by Bloomberg. It ranked eighth in
advising on mergers and acquisitions that involved China last
year, down from third position from 2003 to 2005.

The company, the first overseas bank to buy a stake in a
Chinese securities firm, doesn't have a license to manage a
domestic Chinese offering.

While Morgan Stanley owns 34 percent of China International
Capital Corp., it has no management control. Elaine La Roche was
the last Morgan Stanley-appointed CEO of CICC, stepping down in
June 2000. She said there had been disagreements over management
in a 2005 interview with Bloomberg. Since then, Goldman Sachs
Group Inc. and UBS AG have set up brokerage ventures in China
that are licensed to underwrite stock sales.

The Chinese government last year stopped issuing new
licenses to foreign firms.

``Our partnership with CICC has worked out extremely well
because the Chinese appreciate the value of commitment and of
relationship,'' Christianson said. ``Our goal now is to continue
to help CICC where they require.''

International firms such as Citigroup Inc. and Deutsche
Bank AG have been competing for talent in a market where equity
sales and takeovers in China reached a record $137 billion last
year.

Adding Outlets

Citigroup Chief Executive Charles Prince said in March the
firm will add 14 outlets in China this year and expand
investment banking operations in the country. The bank last
month hired Eugene Qian from Deutsche Bank AG as managing
director of China investment banking.

Morgan Stanley has expanded in Asian markets including
China, India, Korea and Japan. In March, the firm said it would
pay $425 million to buy out its Indian joint venture with JM
Financial Ltd., opting to go it alone in the world's second-
fastest-growing major economy.

The bank also bought a Turkish brokerage as part of its
plan to start offering a range of businesses including trading,
investment banking and real estate, it said in November.

To contact the reporter on this story:
Cathy Chan in Hong Kong at
.

Deal for mortgage raises questions

Herbert A. Freeman said when he bought his double-wide manufactured home in 2001, the seller asked a favor.

For $5,000, the seller — Dennis D. Williams — wanted to use Freeman’s name and credit to also buy himself a home.

Freeman, a school custodian, agreed. He signed a $420,750 mortgage in his own name for Williams’ house.

The transaction is one of dozens of questionable deals tied to the troubled neighborhood of Windy Pines South.

At the time, Williams was president of Fintech Homes, a company that sold land-home packages in the subdivision south of Hope Mills. Freeman came to Williams about buying one of the double-wides.

Williams wanted to purchase a luxury home in the Buckhead neighborhood, off Raeford Road, Freeman said. He offered Freeman the $5,000 if he would buy it for him, with an agreement that Williams would make all the payments and pay the taxes, Freeman said.

Deeds show the transaction took place October 2001. Freeman obtained the loan to buy the house at 604 Humboldt Place. Freeman’s name is also on the sales deed as the purchaser.

The closing attorney, Andre Barrett, has since been sentenced to prison for unrelated real estate fraud. Barrett did many of the other closings in Windy Pines South, where homeowners found problems with their mortgages and ended up in foreclosure.

A week after the transaction, deeds show, Freeman got his own home in Windy Pines South with a mortgage of $89,200. Barrett closed that deal, too.

Although loan applications are supposed to list a borrower’s financial obligations, Freeman’s application for his own home makes no mention of the $420,750 loan, which would have carried monthly payments of $3,770, according to paperwork. Freeman said he earned no more than $2,800 per month as head custodian at Gray’s Creek Elementary School and with other part-time jobs.

Williams declined to answer questions about the deal.

But real estate records indicate Williams probably had credit problems. Deeds show a bank had begun foreclosure proceedings against Williams and his wife on a $345,000 home in the Kingsford subdivision that they bought in August 1999. Their mortgage — with adjustable interest that started at 12.75 percent and would go up after three years — was the same type of costly loan that sunk many homeowners in Windy Pines South.

The Williamses’ loan also carried a prepayment penalty, which meant the bank could charge fees if they sold the home before the interest rate went up.

Freeman, 54, said he had good credit. The Buckhead mortgage — in Freeman’s name — appeared to have good terms: no adjustable interest, no penalties.

Freeman liked Williams. When Freeman fell behind with his own payments in Windy Pines South — the $600 mortgage kept going up, like everyone else’s in the neighborhood — Williams gave him $6,000 to catch up, Freeman said.

“I went to Dennis, and he gave me the money to get current,” Freeman said. “I’m thinking everything is OK.”

In June 2003, deeds show Freeman extended to Williams an option to buy the Buckhead home. Freeman gave Williams power of attorney to deal with Equibanc Mortgage regarding payments and balances.

In December 2005, a deed shows, Freeman sold the property to Williams for $500,000. Freeman said no money changed hands. The home, with a swimming pool, remains in the Williamses’ name.

Freeman wasn’t so lucky. He fell behind again. The bank eventually foreclosed. He lost his home when the bank auctioned it in August 2004.

He was devastated.

“To me, it was the most embarrassing thing I ever had to do,” Freeman said. “I stayed over there a while and I got to know the people and stuff, and then when my foreclosure came, I had to move out.”

More than two years later, he’s still paying off bankruptcy debts. He rents an apartment near Bonnie Doone, off Bragg Boulevard.

“It was a waste of my time, and a dream of a home went down the tubes,” Freeman said.
Staff writer Matt Leclercq can be reached at leclercq@fayobserver.com or 486-3551.