Today was one of those days where it felt like it would be an up-day and most traders were feeling good, but the last hour's trading came down so far so fast that traders had little feel whether we'd have an up or down session until right before the closing bell.

Oil inventories were not a huge surprise like the week before, but the data sent oil much higher and then a weak US dollar only added to oil price gains. Some may use the Beige Book as the reason for the sell-off, but it might be how little the government expects Wall Street executives to work for if they are a TARP bank.

Here were today's unofficial closing bell levels:

Dow 9,956.91 -84.57 (-0.84%)
S&P 500 1,081.36 -9.70 (-0.89%)
Nasdaq 2,150.73 -12.74 (-0.59%)

Top Day Trader Alerts
Top 10 Analyst Calls
Top Stock Rumors

A new bill that would revamp student loan programs in the United States passed the House of Representatives. The proposed program, which would affect the largest change on college aid since they came into existence in the 1960s would push private lenders out of the business and put the U.S. government in control.

The new measure would end subsidies for private lenders, increase Pell Grants available for students in financial need, and create grants for community colleges. The proposal includes almost all of President Obama's key points on higher education from the campaign trail. It passed the House 253 – 171, with most representatives sticking to party lines.

This post is part of AOL Money & Finance's Best & Worst in Money 2008 feature.

Consumers took it in the chin so many times this year, it's surprising many of us are still standing. Consumer credit for student loans, mortgages, car loans and just about everything else dried up completely by October. Oil prices soared, drained our pocketbooks, and then dropped like a stone after doing the damage. Food prices continue to soar as the prices for our homes and the value of our retirement funds plummet. So how does one decide, which is the most disturbing consumer trend? Let's look at our top four picks, presented in alphabetical order.

Americans with good credit struggling to get loans at favorable rates
While rates are starting to come down thanks to the latest bailout by the Fed, good deals are hard to find. Most banks are hoarding their cash and only lending it out to those with credit scores over 760. Even then, rates are not that favorable. You can only think about applying for a mortgage or equity line if you have at least 90 percent equity in a home that has probably lost value and, in most cases, you must have 80 percent equity to get a home loan. How can the U.S. stop the downward spiral in home values until credit is available for qualified buyers?

The dollar fell, then firmed, against most of the world's other major currencies Tuesday at mid-day, on word of yet another U.S. government intervention to ease the financial crisis. (For full currency data, click here.)

Still, the more important theme, many economists and analysts agree, is how well the dollar has fared given the remarkable increase in debt by the United States and the supply of dollars globally.

The dollar weakened about one cent to $1.3040 versus the euro and about half a cent to $1.5160 versus the British pound on Tuesday at mid-day, after the U.S. Federal Reserve announced it would buy up to $600 billion in mortgage and mortgage servicer-related debt and up to $200 billion in consumer and small business-backed loans, to free up credit in these sectors. The dollar also fell about one cent to 95.53 versus Japan's yen, and about half a cent to $1.1881 versus the Swiss franc.

Under the new programs announced Tuesday, the U.S. Treasury will provide about $20 billion in credit protection to the U.S. Federal Reserve, using money from the $700 billion Troubled Asset Recovery Program (TARP).

In September, the Fed's balance sheet totaled $924 billion, when the first wave of the financial crisis began to freeze credit markets and decimate stock markets around the world. However, if all loan guarantees are accessed, and if all of the remaining $780 billion debt is added to the Fed's balance sheet, that balance sheet would increase to about $3 trillion.

Barron's (subscription required) reports that the news this week about Auction Rate Securities (ARS) leaves $220 billion worth of the $330 billion market still frozen. Those among the two-thirds of ARS holders who have not gotten any good news must have mixed feelings -- happy that some of their colleagues have the potential for relief, but wondering when they will get their money back.

The ARS market is complicated because the securities were issued in many different forms. Barron's reports that these issuers include "municipalities, closed-end funds, student-loan trusts and collateralized debt obligations [CDOs]." Many of these issuers have announced little, if any relief for those frozen in ARS hell. For example:

• Municipal ARS market has fallen 40% from $175 billion to $105 billion since the beginning of 2008 and only "5% to 8% of muni auctions are proceeding -- at interest rates of 8% to 15%."
• Closed-end funds have reduced the amount of ARS outstanding by 37% from $64 billion to $40 billion. For example, Nuveen's closed-end funds sold $500 million of variable-rate demand-preferred shares (VRDPs) last week to replace the same amount of ARS. (VRDPs' interest rates reset in auctions but have a put option that allows an investor to sell the VRDP to the bank running the auction if it fails). Barron's thinks that if the VRDP market functions, "more than 50% of closed-end-fund ARS could be redeemed" by the end of 2008.

"Since the market started its downturn early this year, I have avoided all financial stocks and resisted the temptation of value plays," says Dave Dyer.

In his Dave Dyer's Newsletter, he explains, "Well, it is now time to violate both of those prohibitions at once." Here, he looks at a new buy for SLM Corporation (NYSE: SLM), commonly known as Sallie Mae, the nation's largest provider of college loans and savings programs."

"There must be some financial areas that have predictable, growing demand, willing customers who actually have low default rates, and securitization processes that do not involve the type of financial engineering that is only intended to hide risk.

"Well, there is such an area, and it even involves a product that it makes sense to finance since it will actually increase in value over time. I'm talking about student loans.

Reuters reports that Citigroup (NYSE: C) is poised to announce today the sale of $400 billion worth of assets -- that's 18% of the total. We'll need to wait to find out which assets it plans to sell and how much of a loss (or profit) Citi will take when it sells them. But the New York Times reports the company's deciding based on industry growth trends, market positions, geographic growth rates, business plans and financial results.

I worked for a global bank during a credit contraction and part of my job was to figure out which assets to sell. From that experience, I know that Citi's challenge is to find assets that don't fit with Citi but are worth more to another owner. That's because often the assets that make the most sense to sell strategically are the ones that nobody else wants to own. And the ones that make the most sense to keep are the ones that could generate the biggest profit, if sold. Citi's challenge is to sell the $400 billion worth of assets that make strategic sense to sell and will fetch an attractive price. In today's market, that is a challenge.

So what Citi assets could be on the block? Reuters notes that Citi's U.S. student loan business may make sense to sell, after recent legislative changes and turmoil in the securitization market have made it less profitable. Citi may sell Primerica, a consumer sales network for life insurance and investments. And Citi should sell assets on its trading books, which have contributed to much of the $45 billion write-downs that Citi has taken so far.

Shares of for-profit college provider Apollo Group, Inc. (NASDAQ: APOL) are off more than 25% today after the company reported dismal second quarter results, driven down by lower than expected enrollment and increased expenses.

Could investors have seen it coming? Maybe. Back in February the New York Times wrote about an ominous sign of trouble at the company, which I also blogged about: insiders were selling shares in the company like there was no tomorrow, and stock buybacks had ground to a halt.

I'm not suggesting that there was any impropriety here. Au contraire, we should at least commend them for stopping the buybacks, rather than using shareholder capital to inflate the price while insiders sold. But maybe there was something more sinister. Apollo doesn't exactly have the best corporate governance reputation on the planet, having recently been found liable in a $277 million class-action lawsuit.

Undergrad and graduate students may soon be feeling the pinch of the subprime mortgage default-induced credit crunch.

Securities tied to student loans have failed to generate investors' interest, leaving roughly $3 billion in a sort of limbo, The Wall Street Journal reported Tuesday (subscription required).

Typically, the banks involved in the deal -- in this case Goldman Sachs (NYSE: GS), J. P. Morgan Chase (NYSE: JPM) and Citigroup (NYSE: C) -- would step in to buy the securities when demand is weak. However, because the major banks are already flush with loans and bonds they're trying to get rid of, they have been allowing the auctions to fail, The Journal reported.

Student loan manager Sallie Mae (NYSE: SLM) fell 42 cents to $19.73 on the news in Tuesday morning trading.

Bond demand is weak

The auction process is similar to those held for municipal bonds, corporate debt and other debt securities. However, Wall Street is not obligated to step in and buy student loan-backed securities when demand is weak.

SLM Corp. (NYSE: SLM), a manager of $160 billion in education loans that serves nearly 10 million student and parent customers, is recently trading down $2.04 to $20.83. SLM announced today that it has entered into a series of transactions with its equity forward contract counterparties at Citibank (NYSE: C). SLM call option volume of 39,244 contracts compares to put volume of 16,830 contracts. SLM January option implied volatility of 110 is above its 26-week average of 43 according to Track Data, suggesting larger price movements.

Options Update is provided by Stock Specialist Paul Foster of theflyonthewall.com

There have been rumors and press reports for a couple of weeks that the J.C. Flowers deal to buy student loan company Sallie Mae (NYSE: SLM) might fall apart. Finding debt to close the purchase of the company was getting tough.

Yesterday, the rumors became news. Flowers backed out of its commitment. The Wall Street Journal writes that, "Mr. Flowers informed a group of UBS bankers that he wasn't prepared to pay the $60-a-share price he had agreed to in April." UBS is Sallie Mae's banker.

Flowers may simply be fishing for a price lower than his first offer. With its stock price at risk, the SLM board might be tempted to take a reduced price.

The buyout firm is arguing that legislation which could hurt the student loan market amounts to a "material adverse effect" to the deal, and that this gives Flowers the legal right to walk away.

The SLM board does not have any good choices. It could sue Flowers to complete the deal, and it probably should. But, as the legal fight drags on shares in the student loan company are likely to fall. That leaves the board between Scylla and Charybdis.

Douglas A. McIntyre is a partner at 24/7 Wall St.

In March of this year, the office of New York Attorney General Andrew M. Cuomo entered into investigation of questionable practices involving institutions of higher learning and possible manipulations of lists of student loan issuers. The claim is that several well known schools and others are allegedly taking "incentives" from lenders for providing them preferential treatment.

Ellen Frishberg, director of student financial services at Johns Hopkins University, indicated that in her opinion the investigations of lender listing practices are something akin to a witch hunt. She maintained that some schools might be unfairly targeted for investigation by virtue of having put the work into screening to create lists of quality lenders. Frishberg made clear that Hopkins has indeed received solicitations for preferred list placement, which reveals the truth of the problem, but said that Hopkins turns a deaf ear to enticements of this kind.

In an article from The Baltimore Sun she stated, "We have ethics here." Since the time Ms. Frishberg issued that statement, she has resigned from her position with the university after investigation concluded she received some $67,000 in assorted grants and payments from companies she had coincidentally chosen to endorse. So much for ethics.

New York Attorney General Andrew Cuomo's quest for the Governor's seat is exposing a deep flaw in the relationship between student loan companies and universities.

According to the New York Times [registration required], Cuomo's investigations led to the dismissal of Columbia University's financial aid director yesterday after the release of documents showing he promoted a student loan company -- Student Loan Xpress -- in which he had a stake, sending letters to parents and alumni on three occasions praising the lender.

Columbia joins other schools including Johns Hopkins and the University of Texas, Austin that have been caught up so far in this scandal. The fundamental problem is that schools don't pay much money to their employees even as they keep raising tuition. As with the rest of the U.S. economy, the gap is covered by debt -- in this case student loans.

When watching scandals being uncovered by regulators and the media, I'm often stunned and find myself asking this question: "How could it not have occurred to people that this was a conflict of interest that would lead to unethical conduct?"

At Enron, it was CFO Andy Fastow managing funds doing business with Enron. At investment banks, it was analysts being compensated based on their ability to generate banking business for the firm. Now in the student lending industry, we're seeing all kinds of similar conflicts:

• Colleges hiring student lending companies to answer the phones for the school's financial aid office -- without the callers knowing
• Financial aid officials receiving stock in a student lender through a private placement
• And now, according to the Wall Street Journal, "Lenders play aid officials at schools with free stuff" including expensive dinners, video iPods, and concert tickets.

With all of these conflicts, can there be any doubt that students received bad advice about where to get loans?

The scandals in the student lending industry continue. On April 1st, I wrote about student loan companies taking phone calls for college financial aid offices. Apparently, an Education Department official and financial aid directors at several collges received stock in a student loan company's private placement. This has has "Pay to play" written all over it. The President of the student lending company, Student Loan Xpress, characterized the stock transfers as "gifts" while several of the recipients claim to have paid for them. Either way, this raises two questions:

• Assuming they did pay for the stock: Is it appropriate for financial aid directors to have such a close relationship with an executive at a student loan company that they are purchasing stock in a private placement?
• If it was merely a gift, why was their relationship so close that he decided to give them a gift. Or was it a quid pro quo? "I give you stock in my company, you steer students towards us for their lending needs."

It's hard to imagine any way that there isn't some foul play involved here. The colleges involved, Columbia, University of Southern California, and the University of Texas at Austin have placed the individuals involved on leave. With college costs careening out of control, students need to be able to count on receiving unbiased advise from the financial aid offices at the colleges they are attending. Senator Ted Kennedy of Massachusetts is conducting an inquiry into student lending practices. This may be just the tip of the iceberg in what could break into a full-fledged scandal. Hopefully this will get the media attention it deserves.