Herbert Sandler

The husband and wife team of Herbert and Marion Sandler are businesspeople, the founders and co-CEOs of Golden West Financial Corporation and World Savings Bank. In 2004, after 43 years running Golden West Financial Corporation, Marion was described by the Columbia School of Journalism as “the first and longest-serving woman chief executive officer in the United States.”

Herbert was born in New York City and was trained as a lawyer. Marion was born in Biddeford, Maine, and has a Bachelor's degree from Wellesley College and an MBA from New York University.

Career

The Sandlers purchased Golden West Savings and Loan from the founder ('Mr Jacoby') in Oakland California and created Golden West Financial Corp, the parent company of World Savings Bank, which was once one of the largest S&Ls in the US with assets of almost $80 billion, deposits of $46 billion, and 9,300 employees as of 30 November 2003. Under the Sandler's management Golden West generated a 20 percent average annual compound growth over a 35 year period. This prompted Jason Jennings, author of "Less is More", to describe their company as "one of the most efficient and productive money machines on the planet".

Golden West was voted the nation's most admired mortgage services company three times by Fortune magazine in 2006, 2005 and 2003. FORTUNE's annual list of the nation's most admired companies is based on surveys of 10,000 executives, directors, and securities analysts who rate the ten largest firms by revenues in their own industries using the following eight criteria: social responsibility, long-term investment value, employee talent, quality of products/services, innovation, use of corporate assets, financial soundness, and quality of management. Prior to 2003, Golden West was voted the nation's most admired savings institution seven times. http://findarticles.com/p/articles/mi_m0EIN/is_2006_Feb_28/ai_n26775126

The Sandlers were also named "2004 CEOs of the Year." by Morningstar, Inc. Patrick Dorsey, director of stock research for Morningstar, stated that Golden West has "created a phenomenal track record during the past four decades in a tough industry that is both commoditized and unpredictable." Dorsey goes on to say "The Sandlers of Golden West have created a company that is a paragon of corporate governance." http://findarticles.com/p/articles/mi_m0EIN/is_/ai_n8684079

The Sandlers were known for their thriftiness as business managers. In an interview in 2002, Marion Sandler explained why the company has no receptionist at its executive offices:

"I can't imagine paying someone to sit out there all day doing nothing but smiling and greeting people."

Golden West was sold in 2006 for $24 billion to Wachovia Bank. The merger was completed in October 2006. The Sandlers owned about 10% of the company at the time of the sale, making their share of the sale price worth about $2.4 billion. Of this the Sandlers gave $1.3 billion to the Sandler Family Supporting Foundation.

Role in Subprime Mortgage Crisis

Sandler and his wife have throughout their public life denounced predatory lenders and the poor underwriting practices of other lenders. However, the actual practices of their firm especially in the 2000s, undermined their conservative lending principles and reputations, especially in the wake of the housing crash in 2008.

The Sandlers are credited with the invention of the "Pick-A-Pay" mortgage that allowed borrowers to pay less than the interest due on their loan each month -- which increased the total amount owed by the borrower. Analysts place the blame on the near failure of Wachovia in the fall of 2008 on the "Pick-A-Pay" mortgage portfolio they acquired from the Sandler's firm.

Martin Eakes, the director of the Center for Responsible Lending, said that prepayment penalties would make it hard for cash-poor borrowers to refinance a loan for one with more manageable terms, and helped to get a law passed in North Carolina prohibiting such charges. The Sandlers supported prepayment penalties, acknowledging that lenders used the penalties to lock borrowers into “absolutely awful” loans, but saying that his firm used the penalties to fend off unethical brokers who enticed borrowers with low-interest-rate loans that often had hidden fees. Sandler described independent brokers as "the whores of the world”, nonetheless by 2006 independent brokers generated 60 percent of World Savings' loan business, and he claimed that he was compelled to do so because of brokers were a dominant force in the mortgage industry. World Savings was suppose to telephone applicants to ensure that they understood the terms of their loan, as a check on the representations that brokers made to borrowers, but these calls reached only about half of the borrowers.

Golden West Financial's, and by extension the Sandlers' since they owned and ran the company, central role in the mortgage crisis lead to the Sandlers being accused of hypocrisy. The couple were mocked on an episode of Saturday Night Live, (which has since been removed from repeats). Others have suggested that the Sandlers' should use the gains from the sale of Golden West to bail out the many non-profits who will suffer losses of donations due to the mortgage crisis and recession.

Sale of Golden West and Wachovia's demise

The Sandlers sold their firm at the top of the market, saying that they were growing older and wanted to devote themselves to philanthropy. A year earlier, in 2005, World Savings lending had started to slow, after more than quadrupling since 1998. Some current and former Wachovia officials say that the merger was agreed to in days and that it was impossible to conduct a thorough vetting of World Savings’ loans. They noted that the creditworthiness of World Savings borrowers edged down from 2004 to 2006, while Pick-A-Pay borrowers had credit scores well below the industry average for traditional loans.

World Savings lending volume dipped again in 2006 shortly after the sale to Wachovia was initiated. This prompted World Savings to attract more borrowers by taking a step that some regulators were starting to frown upon, and which the company had been resisting for years: it allowed borrowers to make monthly payments based on an annual interest rate of just 1 percent. While World Savings continued to scrutinize borrowers’ ability to manage increased payments, the move to rock-bottom rates lured customers whose financial reliability was harder to verify.

While Wachovia Chairman and CEO G. Kennedy "Ken" Thompson had described Golden West as a "crown jewel", investors did not react positively to the deal at the time. Analysts have since said that Wachovia purchased Golden West at the peak of the US housing boom. Golden West's mortage-related problems led to Wachovia suffering writedowns and losses that far exceeded the price paid in the acquisition, ending up in the fire-sale of Wachovia to Wells Fargo.

Predatory Lending and Saturday Night Live

The October 4, 2008 episode of the NBC sketch comedy show Saturday Night Live (hosted by Anne Hathaway with musical guest, The Killers), featured a sketch centering on how the economic bailout affected individuals who had either squandered their money or taken to predatory tactics to make more money. In the sketch, the Sandlers (played by long-standing castmember Darrell Hammond and feature player Casey Wilson) were caricatured as predatory lenders who caused the downfall of Wachovia Bank [10-4-08] and were referred to in captions as "people who should be shot." Executive producer Lorne Michaels spoke with the Los Angeles Times on October 7 and said he had no idea the Sandlers were real people and that there is "absolutely no evidence" that the Sandlers engaged in any wrongful behavior. Times 10-7-08 In fact, the Sandlers helped found and are among the largest benefactors of the Center for Responsible Lending, a nonprofit, nonpartisan research and policy organization dedicated to protecting homeownership and family wealth by working to eliminate abusive financial practices. As a result, the sketch now runs on NBC.com's video library and in a televised NBC rerun with the reference to the Sandlers and their corrupt activity (along with Barney Frank (Fred Armisen) referencing this) cut.

Political and other causes supported by the Sandlers

According to New York Times reporter Matt Bai, the Sandlers, along with Democratic donors George Soros and Peter Lewis established America Votes "to coordinate various get-out-the-vote drives during the 2004 election". The Sandlers also sent their son-in-law Steven Phillips as their representative to the October 2005 meeting of the Democracy Alliance at the Chateau Elan near Atlanta Georgia.

ProPublica

In November 2007 Sandler announced that he had taken on the task of helming the board of the new organisation ProPublica and that his family foundation would be giving $10 million a year to support the group. The Sandlers' move reflects a growing concern within the philanthropic world about cutbacks in investigative reporting and other public-interest journalism as traditional newspapers shrink their staffs in an effort to remain economically competitive in the Internet era. http://philanthropy.com/free/articles/v20/i02/02001001.htm They recruited journalist Paul E. Steiger, the former managing editor and editor-at-large until the end of 2007 of The Wall Street Journal, to head a newsroom in New York of 24 full-time reporters and editors, which will start operations in January 2008. "Stories which have moral force, stories that are important to the sustainability of a democracy," he says, "those are the stories I hope we will be doing."

Slate journalist Jack Shafer raised questions about ProPublica's ability to provide independent nonpartisan journalism given the nature of Sandler's other political donations which include "giving hundreds of thousands of dollars to Democratic Party campaigns."

Organizations funded by the Sandlers

• Public Library of Science
• American Asthma Foundation
• Center For Responsible Lending
• American Civil Liberties Union (ACLU)
• Moveon.org
• ProPublica
• America Votes
• ACORN
• Center for American Progress
• Human Rights Watch
• Oceana