J.C. Flowers: Sallie Mae lawsuit is 'meritless'; recent legislation constitutes 'material adverse effect'

J.C. Flowers & Co. LLC on Oct. 9 called the recent lawsuit filed by SLM Corp. against the Flowers-led consortium that previously agreed to acquire the student lender "meritless" and claimed that recent federal student lending legislation constitutes a "material adverse effect" on Sallie Mae's financial condition.

Other members of the Flowers consortium include Friedman Fleischer & Lowe LLC, JPMorgan Chase & Co. and Bank of America Corp.

Flowers noted that the College Cost Reduction and Access Act will cut subsidies to the student loan industry by $22.3...