First Marblehead shares sink

Shares of First Marblehead Corp. plunged after a bankruptcy filing by a company that offers financial backing for the student loan services that First Marblehead provides.

The Education Resources Institute filed for Chapter 11 protection in bankruptcy court in Boston late yesterday.

The Boston-based nonprofit, known by its acronym TERI, offers guarantees to cover unpaid private student loans. It guarantees nearly all the student loans that First Marblehead bundles into securities sold to investors in bond markets.

The bankruptcy filing shifts greater credit risk onto Boston-based First Marblehead. The company's shares sank $2.83, or 37 percent, to $4.87 in morning trading.

Meanwhile, First Marblehead says it's trying to find another party to serve as a financial guarantor. (AP)