Thursday, September 06, 2007

Tom Brown: Defending First Marblehead

Yes, Marblehead recently received a subpoena from the New York A.G.’s office. From what I can tell, every company that’s involved in the student lending business has received a subpoena from the New York A.G.’s office. I understand the A.G. is looking into Marblehead’s GATE lending, which is a tiny (like, 2% of originations), marginally profitable part of its business that the company is in the process of winding down. The subpoena is completely immaterial; the only reason the company even disclosed it is that people in the Attorney General’s office insist on blabbing to the New York Times.

I understand why reporters start researching stories with a set of preconceived notions about what they’re going to find. That’s what I do when I look at companies! But when the facts don’t fit my initial expectations, I change my mind.

Why can’t New York Times reporters manage that? Eric Dash apparently spent months researching this story. He talked to members of the board, to former employees, to competitors, to me—to anyone who had anything of interest to say about the company. He clearly did not find anything incriminating. Is it too much to expect that the tone of his article match that fact? Instead, Dash piles insinuation on baseless allegation, and unfairly smears a company that’s actually doing a lot of good for student borrowers.

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