§1155 Connie Lee privatization

Summary

Turns the College Construction Loan Insurance Association into a private, for‑profit company and sets rules about how it must act and be owned. The company must not be treated as a U.S. government agency or a government corporation, and people cannot sue the United States under the Tucker Act because of the company’s actions. The company must follow this law and, where it fits, the District of Columbia Business Corporation Act (or similar State law). It may enter contracts, take on liabilities, sell products and services, and do what a normal private business does. The Student Loan Marketing Association may not own more than 42 percent of the company’s shares as of September 30, 1996, and may not control day‑to‑day operations (though it may vote as a shareholder and keep appointing certain directors while an older rule remains in effect). Until the Treasury sells stock held by the Secretary of Education, the Student Loan Marketing Association may not give financial support; after that sale it may provide support only on terms no better than those it gives others. No debt or insurance the company backs is a U.S. government obligation or guaranteed by the Student Loan Marketing Association. For six years after September 30, 1996, the company must put a clear notice in its insurance contracts and securities papers that its obligations are not backed by the U.S. government and that it is not a government instrumentality; for five years after the stock sale it must also state the United States is not an investor. The company must change its charter and articles quickly to meet these rules and cannot keep a name like “College Construction Loan Insurance Association.” The Treasury must sell, and the company must buy, the Secretary of Education’s stock within 90 days after September 30, 1996 (or up to 150 days by agreement). The sale price must come from a binding independent appraisal by a nationally recognized financial firm chosen jointly (or by a third party if they cannot agree). The Treasury is reimbursed from the sale proceeds for costs, and the company pays half the appraisal costs. The Treasury must report to Congress within 6 months after September 30, 1996. “Corporation” means the College Construction Loan Insurance Association as it existed on the day before September 30, 1996, and any successor. Money from the stock sale, certain warrants, and sale of the “Sallie Mae” name must go into an account run by the District of Columbia Financial Responsibility and Management Assistance Authority. Some funds must be used for public school construction and repair in the District of Columbia and for the District’s School Reform Act of 1995. Of the stock‑sale money, $5,000,000 must go into a revolving credit enhancement fund for DC public charter schools. That fund is split so half pays grants to nonprofit groups that help charter schools get financing, and half pays grants to entities (including charter schools) that help with buying, building, renovating, or securing loans, bonds, or lease guarantees. Grants cannot be direct loans to schools. The Mayor and a committee will run the grant programs, and beginning in fiscal year 2003 the Office of Public Charter School Financing and Support handles applications and payments, but no grant may be made without the committee’s approval.