The Business Plots, Then and Now

In 1933, a group of American businessman planned a coup to take down the new President, Franklin Roosevelt. In this scheme, General Smedley Butler would be tasked with orchestrating the overthrow. This attempted coup was called the Business Plot.  

College students today may ask, so what's so important about this moment in history?  The point is that we have entered an era again where big business has a dominating influence over American politics. In the case of the 1933 moment, the coup was reactive. American business had failed, a Great Depression was in progress, and businessmen were fighting to maintain control, a control that they were used to having under Harding, Coolidge, and Hoover. The man tasked to lead the plot, General Butler, squashed it before it happened. And the story largely faded away. 

Eight years later, in 1941, the US would be fighting a world war against global fascism and imperialism.  In the aftermath of the war, a stronger nation would arise. Today, we are also a nation facing intense competition and conflict, this time against China, Russia, India and other nations, with global climate change being a factor that wasn't apparent back then. 

In 2024, US business people, some of the richest people in the world, did something similar, but more proactive and less controversial. Today, folks, in general are OK with American businessmen pulling the strings. The most wealthy man have succeeded where big banks and big business failed before. And they have elected a friend. Today, cryptocurrency is booming. The stock market is booming for now. Unemployment is at record lows--for now. Big business has managed to gain greater control of the US government with little or no uproar. 

 

When Banks Lost Control of the Student Loan Mess

History can be many things. It can be both informative and purposely deceptive. And from time to time, historical events need to be revisited if we seek the truth. We also find critical historical analysis essential when we think about US higher education and student loan debt from a People's perspective.

In a previous article we said Best and Best's classic The Student Loan Mess needed to be updated and reexamined. Although the book was an exceptional chronicle of the student loan industry from 1958 to 2013, it missed at least one key event, the 2008-2010 bailout of Sallie Mae and a number of banks who made questionable private loans guaranteed by the US government. This lesson is especially important if the US government decides to get out of the student loan business or reduce government oversight of student loans.

From 1965 to 2010, the federal government was a backstop for private student loans, Guaranteed Student Loans, also known as the FFEL loans. Annual volume of private loans skyrocketed, from $5B in 2001 to over $20B in 2008, when 14 percent of all undergraduates had one. A secondary market for private student loan debt (student loan asset-backed securities) also began to flourish. An industry group, America's Student Loan Providers (ASLP), provided political cover for private lenders.

In 2007, President George W. Bush signed the College Cost Reduction and Access Act of 2007 (HR 2669) which cut subsidies to lenders and increasing grants to students. But this did little to contain the growing mountain of student loan debt. A mountain of unrecoverable debt that was crushing millions of consumers as the US was facing an enormous economic crisis, the Great Recession.

In rereading The Student Loan Mess, we also discovered that these private entities had not only made questionable loans, some private lenders had also bribed university officials to become preferred lenders. How commonplace this student loan grift was has not been adequately explored.

In 2008, the Bush government began a bailout of these private lenders, the Ensuring Continued Access to Student Loans Act (ECASLA), which amounted to $110B. This event occurred largely without notice. And because a larger Great Recession was happening, the ECASLA never received much media attention.

As part of Health Care and Education Reconciliation Act of 2010, President Obama's takeover of the Guaranteed Student Loan program in 2010, did get attention. Ending the Guaranteed Student Loan program was supposed to save the US government $66B over an 11-year period. This rosy projection never materialized. The FFEL loans acquired by the U.S. Department of Education (ED) during the transition to the Direct Loan program are now part of the Direct Loan portfolio. The U.S. Department of Education (ED) acquired an additional $20.4 billion in face amount of FFEL loans from lenders during the transition from the FFEL program to the Direct Loan program.

The FFEL loans that were not acquired by the U.S. Department of Education (ED) during the transition to the Direct Loan program remained with the original private lenders. These loans continue to be serviced by the private lenders that issued them.

For-profit colleges, the engine for much of this bad debt, did get scrutiny, and from 2010 to 2023, their presence was reduced. But overpriced education and edugrift continued in many forms. And after a short respite from 2020 to 2024, the mountain of bad student loan debt continues to grow.

Related links:

A Report on the Loan Purchase Programs Created by ECASLA

Student Loan Debt Clock

America's Student Loan Providers | C-SPAN.org

Student Loan History (New America)

National Day of Mourning, Thursday 11-28-2024 (United American Indians of New England)

Since 1970, Indigenous people & their allies have gathered at noon on Cole's Hill in Plymouth to commemorate a National Day of Mourning on the US Thanksgiving holiday. Many Native people do not celebrate the arrival of the Pilgrims & other European settlers. Thanksgiving Day is a reminder of the genocide of millions of Native people, the theft of Native lands and the erasure of Native cultures. Participants in National Day of Mourning honor Indigenous ancestors and Native resilience. It is a day of remembrance and spiritual connection, as well as a protest against the racism and oppression that Indigenous people continue to experience worldwide.

Join us as we continue to create a true awareness of Native peoples and history. Help shatter the untrue image of the Pilgrims, and the unjust system based on white supremacy, settler colonialism, sexism, homophobia and the profit-driven destruction of the Earth that they and other European settlers introduced to these shores.

Solidarity with Indigenous struggles throughout the world!
From Turtle Island to Palestine, Colonialism is a Crime!
Free Leonard Peltier! www.freeleonardpeltiernow.org

While many supporters will attend in person, we will also livestream the event from Plymouth.

United American Indians of New England (decolonizing since 1970)
info@uaine.org * UAINE website * UAINE Facebook Group

Facebook event

Watch the 2024 National Day of Mourning Livestream on Youtube

Donate

#NDOM2024 #NoThanksNoGiving
No sit-down social, but box lunches will be available.
Masks required!