First Marblehead Shoulders Student Loans

First Marblehead Corp. (NYSE: FMD) said overall equity encountered a nearly $1 billion swing in the fiscal first quarter, after the Boston-based company consolidated billions of dollars of student loans onto its balance sheet, creating a $708 million deficit.

First Marblehead reported $8.3 billion in assets at the end of September, with most of that ($7.4 billion) in the form of student loans. Liabilities were $9 billion, mostly in the form of long-term borrowings.

First Marblehead said non-controlling interests have a $1.03 billion equity deficit. In contrast, First Marblehead shareholders’ equity is a positive $322 million, for a total equity deficit of $707.8 million.

Before the credit crisis, First Marblehead packaged student loans into securities for big banks such as Bank of America Corp. The loans were bundled together into various trusts that resided off First Marblehead’s balance sheet.

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