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Ex-Golden West banker defends his mortgage actions
He, his wife were objects of scathing ridicule on Saturday Night Live; he argues that Wachovia still holds value
Herb Sandler, with his wife, Marion, successfully ran Golden West Financial Corp. and its subsidiary, World Savings, before it was sold to Wachovia Corp. Sandler is upset by criticism of him and his wife after the start of the financial crisis.
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Published: October 6, 2008
SAN FRANCISCO
Once hailed for running their savings-and-loan company like an endearing mom-and-pop shop, Herb and Marion Sandler are now being vilified as ruthless home lenders who helped destroy Wachovia Corp. and contributed to the financial decay that led to the U.S. government's $700 billion rescue plan to buy rotten mortgages.
After deflecting the media for months, Herb Sandler defended his lending record in an interview yesterday. He also tried to make a case for why Wachovia shareholders should be demanding substantially more than the $14.8 billion that Wells Fargo & Co. has offered for the company.
Sandler, 77, spoke to The Associated Press in the San Francisco office of his family's charitable foundation the morning after NBC's Saturday Night Live broadcast a skit deriding the Sandlers as predatory lenders who had duped unsophisticated borrowers and Wachovia, too. A caption shown during the sketch skewered the Sandlers as "people who should be shot."
Although the timing of the interview was coincidental, Sandler was seething after watching a replay of the skit on the Internet.
"I have been listening to this crap for two years," Sandler said. "We are being unfairly tarred. People have been telling us to speak out for some time, but we didn't think it was appropriate. That was clearly a mistake."
The public ridicule represents a 180-degree turn for the Sandlers, who were considered the voices of reason while they steered Golden West Financial Corp. and its subsidiary, World Savings, through a period of financial recklessness that led to the failure of thousands of other S&Ls in the 1980s and 1990s.
Golden West never strayed from its staid lending approach while the Sandlers scolded others for their risky investments in commercial real estate and exotic business ventures.
Herb Sandler agrees with his critics on one point: He and Marion, who were Golden West's co-chief executives for more than 40 years, couldn't have picked a better time to sell the company than when they closed their $24.3 billion deal with Wachovia in October 2006.
After years of double-digit increase, home prices began to crumble once Wachovia took over, and now Wachovia is in such deep trouble that it has agreed to be sold to Wells Fargo for just $7 a share -- nearly 90 percent below the company's stock price at the time of the Golden West takeover.
Citigroup Inc. is fighting in court to enforce an earlier agreement that would allow it to buy Wachovia's banking operations for $2.1 billion, or $1 a share.
The Sandlers were the biggest winners in the Golden West sale, collecting Wachovia stock that was worth more than $2 billion when the deal closed. More than $1 billion of the stock was used to finance the couple's charitable foundation. Herb declined to say how much of the stock the couple still owns, saying only that they still owned enough shares to care what happens to Wachovia.
Toward that end, Sandler hopes to convince Wachovia's shareholders that the bank's mortgage problems aren't as severe as they might seem, especially now that the federal government is prepared to take some of the deteriorating mortgages off lenders' books.
Once the cleanup work is complete, Sandler said, he thinks that Wachovia will be worth $60 billion to $100 billion. Although he said that Wells Fargo should be pressured to pay more, Sandler said that it is preferable to the Citigroup bid, which was negotiated with the help of federal regulators.
Besides trying to fetch more money for Wachovia, Sandler wants to burnish his and his wife's legacy.
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