The Trillion-Dollar Lie – by Matt Taibbi – TK News by Matt Taibbi
Sallie Mae ultimately sued Gray four times. In doing so, they made a strange error. It might have slipped by, but for luck. By the grace of God, Gray said, she met a man in the lobby of a courthouse, a future state Senator named Kevin Thomas, who took a look at her case. Huh, I ve got some ideas, he said, eventually pointing to a problem right at the top of her lawsuit.
Sallie Mae did not represent itself in court as Sallie Mae. The listed plaintiff was SLM Private Credit Student Loan Trust VL Funding LLC. As was increasingly the case with mortgages and other forms of debt, student loans by then were typically gathered, pooled, and chopped into slices called tranches, to be marketed to investors. Gray, essentially, was being sued by a tranche of student loan debt, a little like being sued by the coach section of an airline flight.
When Thomas advised her to look up the plaintiff s name, she discovered it wasn t registered to do business in the State of New York, which prompted the judge to rule that the entity lacked standing to sue. He fined Sallie Mae $10,000 for nonsense and gave Gray another rare victory over a student lender, which she ended up writing about herself this time, in The Guardian.
Corporate creditors sometimes play probabilities and mass-sue even if they don t always have great cases, knowing a huge percentage of borrowers either won t show up in court (as with credit card holders) or will agree to anything to avoid judgments, the usual scenario with student borrowers.
Gray, however, was scrappy and didn t take any shit, and won. She didn t establish any particularly important precedent with her case, except that student lenders can, in fact, lose in court. This It bleeds, we can kill it moment turned out to matter more than it seemed at the time.
Except that being a litigator is as far as I can tell hell on earth, it would be fun to win a case like this.