> Oakland Tribune - November 24, 2008
> Obama brand has local roots Bay Area couple helped grow
> think tank
> By Josh Richman
>
> A liberal think tank helping to shape the incoming Obama
> administration's personnel and policy owes its existence
> in part to a pair of East Bay billionaire banking moguls.
>
> Herb and Marion Sandler made their fortune by building
> Oakland-based Golden West Financial Corp. — parent
> company of World Savings Bank — into one of the nation's
> largest savings and loans, before selling it to Wachovia
> Bank two years ago for $24.2 billion.
>
> But of all their investments, helping to launch the
> Center for American Progress in 2003 and helping to
> bankroll it since — in total, an estimated $20 million —
> could prove most far-reaching. Professor Larry Sabato,
> director of the University of Virginia's Center for
> Politics, said the Sandlers must be pleased with the
> crop that has grown from their seed money.
>
> "Why do you form a think tank like that? In order to
> influence the policy and personnel of your party's next
> administration, and obviously they've done that," he said.
> "It's obvious they've had an impact, and a major one. "...
> To have this many people associated with the organization
> being tapped in senior positions is impressive."
The New York Times December 25, 2008
The Reckoning
Once Trusted Mortgage Pioneers, Now Pariahs By MICHAEL MOSS and GERALDINE FABRIKANT
"We are team-oriented, highly ethical, extremely competitive, profit-oriented, risk-averse, consumer-focused, and we try as much as possible to squeeze out any ego. Hubris is the beginning of the end."
— Herbert Sandler, June 2005
SAN FRANCISCO — Herbert Sandler, the founder of the Center for Responsible Lending, is standing in his bayfront office watching a DVD that trains brokers to pitch mortgages by extolling the glories of the real estate boom.
The video reeks of hucksterism, and it infuriates Mr. Sandler.
“I would not have approved that!” he declares. “I don’t think we should be selling our loans based on home prices continuing to go up.”
But the DVD was produced in 2005 by a mortgage lender that Mr. Sandler and his wife, Marion, ran at the time: World Savings Bank. And the video was a small part of a broad and aggressive effort by their company to market risky loans at the height of the housing bubble.
The Sandlers long viewed themselves — and were viewed by many others — as the mortgage industry’s model citizens. Now they too have been swept into the maelstrom surrounding who is to blame for the housing bust and the growing number of home foreclosures.
Once invited by Congress to testify about good lending practices, the Sandlers were recently parodied on “Saturday Night Live” as greedy bankers who handily sold their bank — and pocketed $2.3 billion in shares and cash — in 2006 before many of their loans began to sour.
Last month, the United States attorney’s office in San Francisco announced dual inquiries into whether World Savings engaged in predatory lending practices or misled investors about its financial well-being. And the bank has been sued by numerous borrowers who claim they were misled into taking out mortgages they could not afford.
At the center of the controversy is an exotic but popular mortgage the Sandlers pioneered that helped generate billions of dollars of revenue at their bank.
Known as an option ARM — and named “Pick-A-Pay” by World Savings — it is now seen by an array of housing analysts and regulators as the Typhoid Mary of the mortgage industry.
Pick-A-Pay allowed homeowners to make monthly mortgage payments that were so small they did not cover their interest charges. That meant the total principal owed would actually grow over time, not shrink as is normally the case.
Now held by an estimated two million homeowners, the option adjustable rate mortgage will be at the forefront of a further wave of homeowner distress that could greatly delay or even derail an economic recovery, mortgage industry analysts say.
<http://www.nytimes.com/2008/12/25/business/25sandler.html>