Herb & Marion Sandler outraged by subprime lending.  But not too outraged to make millions off it.

Herb & Marion Sandler outraged by subprime lending. But not too outraged to make millions off it.

Herb and Marion Sandler may be the reason that SNL skit went down the memory hole.

This March, 2008 New York Times article on the Sandlers is good for a laugh:

“It starts with outrage,” Herb Sandler said. “You go a little crazy when power takes advantage of those without power. It could be political corruption — ”

“Or subprime lending,” Marion interrupted.

“The story of subprime is worse than anyone has written so far,” Herb said, shaking his head in dismay.

“It is,” Marion said, nodding in agreement.

You don’t say.  And this –

Lowell Bergman, a New York Times and “Frontline” contributor who has long been friends with the Sandlers, says much the same thing. “Herb doesn’t like crooks, liars, predatory lenders and lots of other people that you and I wouldn’t like,” he says. “He would like to put them out of business and throw them in jail.”

It’s the hypocrisy, stupid:

Herbert and Marion Sandler, a New York lawyer and Wall Street analyst respectively, bought a small California thrift in 1963 and built it into GDW — one of the largest thrifts in the nation. The company’s business was built on adjustable rate mortgages (ARMs. These were mortgages offered at low “teaser” rates that ratcheted upward as interest rates increased. They were often sold aggressively to unsophisticated home buyers who did not comprehend the vast financial risks they were taking, or who assumed that housing prices would rise high enough to provide a profit to them when they sold their houses. They were targets for lenders peddling mortgages that should have been stamped with a skull and crossbones, for these were among the most seductive and dangerous types of mortgage.

I think I’ll hold my breath and wait for Congressional Democrats to investigate them, and at Herb’s own request, put them in jail. Yeah.  That’s going to happen.

And what they’ve done for mortgages, they’d like to do for investigative journalism, via ProPublica:

ProPublica will offer its own test for the Sandlers’ approach to philanthropy. In the newspaper business, a good story that exposes wrongdoing is something to be proud of, quite apart from whether it produces change or puts someone in jail. But it is clear that the Sandlers have a larger vision for what their new organization will accomplish. “They used to tell me that they weren’t really interested in investigative journalism per se,” Lewis says. “But they saw it as a way to make the world a better place.”

More here, via MM.

Comments

  1. Yes, the Sandlers absolutely are to blame for this whole mess. As a World Savings/Wachovia/Whoever buys us employee for over 7 years, I can personally attest that World Savings’ underwriting standards were conservative and fiscally responsible from 2001 to about 2005.

    In 2005, executives at World Savings were given a directive from the Sandlers to grow the loan portfolio to make us more attractive for an aquisition, due to us being rejected by Wells Fargo and Bank of America for having too small of a mortgage portfolio. We grew the portfolio by relaxing underwriting standards and as a result, we made many loans which were not prudent nor responsible by any stretch of the imagination.

    We created this whole mess that Wachovia now finds itself in and meanwhile, the Sandlers feign outrage while counting their billions. It’s a sad turn of events when the Sandlers get off scott free while the thousands of hard-working employees who helped make them their billions now struggle with potential job-loss.

  2. I can’t disagree with you about pinning some blame on them for GDW and then sticking it to Wachovia, if that’s what you mean by “this whole mess.”

    The overall situation – the climate that permitted the Sandlers to do what they did – I blame Congress.

    You know what’s funny – in the debate tonight both Obama and McCain said they were in favor of rewriting people’s mortgages according to current home prices and lowering interest rates/payments basically to whatever they feel like to make the payments low enough to avoid foreclosure. So if the government can step in a re-write a private contract that people entered into of their own free will, why not re-write the terms of the sale of GDW to Wachovia?

    Mind you, I’m not in favor of any of it, but I’d laugh myself silly if they did stick it to the Sandlers that way. Poetic justice.

  3. I have a different view, as I was on the retail side of World Savings mortgages. I valued the integrity of every loan I wrote. I should mention I was among the first Community Loan Officers in the Branch in my location (Florida).
    Many of the folks who came into my branches trying to refinance their loan with WS unfortunately were the victims of Commissioned Mortgage Brokers. Of those I could help all I could do was a modification, but mostly explained how the loan they had worked.
    Many of these folks were ignorant to the smooth talking, and calculating manipulations of the Broker they thought were trying to help them. Instead the broker raped them with points both front and back, and worked numbers to work the loan just because they had a great credit score.
    The underwriters I worked with were conservative, and I appreciated working with them.
    The Sandler’s did not put the economy into a recession; its partly the fault of the greedy brokers, investors and appraisers who jacked up the values of homes beyond recovery.
    Of course this is my opinion, please keep that in mind. My opinion is based on what crossed my desk.
    I am one of the thousands of displaced employees going in my 10th month of unemployment. I would rather live in my car than work for commission. I could never fathom doing a job that would compromise my values, or the values of my employer just to bring home a paycheck. I thank God everyday my daughters are old enough (just barely) to support themselves (college is on hold for right now).
    I am also grateful for the opportunity to have worked with a company that felt like family.
    The Pick A Pay ARM was not for everyone, but for the right one it was perfect in the right economy. Thanks for letting me write my feelings.

  4. patricia guerrero says:

    There’s greed all the way down the line. Beverly, you may be one of the few ethical loan originators out there but the problem is bigger. Loan originators made huge rebates from selling the WS Pick-a-Pay. These loans were directed to people with good credit but as interest rates rose even the borrowers who intended to pay principal and interest each month could not do so after a while and were reduced to paying just interest, then deferred interest which was added to the loan amount each month and compounded MONTHLY. Like having a $500,000 credit card balance you only make the minimum payment on. Then as home values fell and rates kept rising they could not refinance without paying a 6 months of interest prepayment penalty. But you can see how attractive the porfolio looked to Wachovia; A paper borrowers with an increasing asset (the mortgage balance going up each month as opposed to the dwindling asset of
    a fixed rate mortgage going down each month) and in increasing revenue stream as opposed to a decreasing revenue stream as less interest is paid as the loan balance decreases. The Sandlers may not be responsible for the entire mess ( they did not sell off the loans to be sliced and diced by Wall Street) but they have a huge chunk of blame for Wachovia’s mess. Of course Wachovia did not do their due diligence either. They may have analyzed the fundamentals of the World Savings and been assured that their borrowers were A paper and the loans were not subprime but they failed to factor in what happens when you kill the goose that lays the golden egg.

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  1. [...] Herb & Marion Sandler outraged by subprime lending. But not too outraged to make millions off it… [...]

  2. BizzyBlog says:

    [...] trust placed in them.” It has received predominant funding from the Sandler Foundation (yeah, those Sandlers; Herbert Sandler is Chairman). Other contributors include George Soros’s Open Society [...]

  3. [...] trust placed in them.” It has received predominant funding from the Sandler Foundation (yeah, those Sandlers; Herbert Sandler is Chairman). Other contributors include George Soros’s Open Society [...]

  4. [...] trust placed in them.” It has received predominant funding from the Sandler Foundation (yeah, those Sandlers; Herbert Sandler is Chairman). Other contributors include George Soros’s Open Society [...]