June 6, 2008
Mail-Stop 4561
Mr. Jack L. Kopnisky
Chief Executive Officer, President
and Chief Operating Officer
The First Marblehead Corporation
The Prudential Tower
800 Boylston Street, 34th Floor
Boston, Massachusetts 01089
Re: The First Marblehead Corporation
Form 10-Q (q/e March 31, 2008)
Filed May 12, 2008
File No. 001-31825
Dear Mr. Kopnisky:
We have reviewed your filing and your previous responses and
have the following comments. Where indicated, we think you should
revise your document in response to these comments. If you
disagree,
we will consider your explanation as to why our comment is
inapplicable or a revision is unnecessary. Please be as detailed
as
necessary in your explanation. In some of our comments, we may
ask
you to provide us with information so we may better understand
your
disclosure. After reviewing this information, we may raise
additional comments.
The purpose of our review process is to assist you in your
compliance with the applicable disclosure requirements and to
enhance
the overall disclosure in your filing. We look forward to working
with you in these respects. We welcome any questions you may have
about our comments or any other aspect of our review. Feel free
to
call us at the telephone numbers listed at the end of this letter.
Form 10-Q for the Quarter Ended March 31, 2008
Management`s Discussion and Analysis
Application of Critical Accounting Policies and Procedures
Service Revenue and Receivables
1. We have reviewed your response and the supplemental material
filed
with the Form 10-Q, and note the following items. As to the actual
default rates, gross and net, we note on page 11 of the static
pool
information a line indicating "Cumulative Default Rate Net of
Claims
Cancelled". Please advise us as to how these amounts relate to the
gross or net default rates underlying your assumptions on page 11
of
your Form 10-Q, e.g., are they the equivalent of "net default
rates".
In addition, we note your statement in the last paragraph on page
11
that the Company maintained its weighted average net default rate
assumptions at 7.68% for the portfolio. In this regard, and noting
what appears to be significant increases in the "Cumulative Net
Default Rates" from 12/31 to 3/31 in the static pool disclosures,
supplementally provide the staff, the actual gross and net default
rates, by pool and in the aggregate, at March 31, 2008, and, the
growth in such rates from December 31, 2007, or indicate where
such
information is disclosed by the Company.
2. Noting from the static pool "rolling prepayment rates" table
what
appear to be significant increases in prepayments rates from the
previous measurement date, and your statement in the Form 10-Q on
page 12 that you did not change your assumptions regarding assumed
average prepayment rates over the life of the trust during the
third
quarter, supplementally provide the staff with actual prepayment
rates at the end of the last 2 quarters (or measurement dates) and
the percentage increase between the periods.
Financial Statements
Unaudited Condensed Consolidated Balance Sheets, page 1
Goodwill
3. Please provide us a comprehensive discussion (timing,
description
of reporting units, etc) of your most recent goodwill impairment
tests and consider the guidance in paragraphs 16-35 of SFAS 142 as
your formulate your response. In your response, please:
* Provide detailed information on how you determined the fair
value
of each of your reporting units including a summary schedule of
your
SFAS 142, step 1 test results and an analysis of the results;
* Tell us how you considered the relationship between your quoted
common stock price and your reported book value and net tangible
asset value as of year-end and latest interim period and whether
or
not there is an "implied" impairment of assets;
* Tell us how you considered whether you were required to test for
goodwill impairment in 2008 due to current market conditions, the
decrease in your stock price, published media reports detailing
the
financial condition of major customers, third party borrower
default
guarantors and any other applicable factor(s) in paragraph 28 of
SFAS
142;
* Tell us whether you have had any discussions with third parties
regarding offers to purchase any particular group of assets and
how
any discussions may have influenced your decision as to retest
goodwill or recognize an impairment at any particular balance
sheet
date;
* Tell us what other information would have been required for you
to
conclude that an impairment loss was probable and reasonable
estimatable at year-end and the latest interim period if you
conclude
that an impairment does not currently exist;
* Discuss what involvement your independent auditors have had
regarding comments we have raised on this issue, including any
consultation at the national office level.
* * * *
As appropriate, please amend your filing and respond to
these
comments within 10 business days or tell us when you will provide
us
with a response. You may wish to provide us with marked copies of
the amendment to expedite our review. Please furnish a cover
letter
with your amendment that keys your responses to our comments and
provides any requested information. Detailed cover letters
greatly
facilitate our review. Please understand that we may have
additional
comments after reviewing your amendment and responses to our
comments.
We urge all persons who are responsible for the accuracy and
adequacy of the disclosure in the filing to be certain that the
filing includes all information required under the Securities Act
of
1933 and that they have provided all information investors require
for an informed investment decision. Since the company and its
management are in possession of all facts relating to a company`s
disclosure, they are responsible for the accuracy and adequacy of
the
disclosures they have made.
Notwithstanding our comments, in the event the company
requests
acceleration of the effective date of the pending registration
statement, it should furnish a letter, at the time of such
request,
acknowledging that:
??should the Commission or the staff, acting pursuant to delegated
authority, declare the filing effective, it does not foreclose the
Commission from taking any action with respect to the filing;
??the action of the Commission or the staff, acting pursuant to
delegated authority, in declaring the filing effective, does not
relieve the company from its full responsibility for the adequacy
and
accuracy of the disclosure in the filing; and
??the company may not assert staff comments and the declaration of
effectiveness as a defense in any proceeding initiated by the
Commission or any person under the federal securities laws of the
United States.
In addition, please be advised that the Division of
Enforcement has access to all information you provide to the staff
of
the Division of Corporation Finance in connection with our review
of
your filing or in response to our comments on your filing.
Any questions on the accounting comment should be directed to
Benjamin Phippen at (202) 551-3697 or John Nolan, the Accounting
Branch Chief at (202) 551-3492. All other questions may be
directed
to Michael Clampitt at (202) 551-3434 or to me at (202) 551-3419.
Sincerely,
Christian Windsor
Special Counsel
Financial Services Group
Mr. Jack L. Kopnisky
The First Marblehead Corporation
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