A Boston firm that securitizes banks' student loan assets laid off 500 employees, as much as a third of its staff, after Bank of America stopped doing business with the company.
First Marblehead Corp. linked the layoff with a bankruptcy filing by an unrelated, not-for-profit entity, The Education Resources Institute (TERI), which guarantees student loans against default. Bank of America had a provision that allowed it to end its relationship with First Marblehead if TERI went out of business, according to an Associated Press story. B of A reportedly accounted for about 15 percent of First Marblehead's annual revenue.
"The market and credit conditions have not improved and TERI's bankruptcy filing has forced our business situation to change quickly," First Marblehead Chief Executive Jack Kopnisky said in a statement.