WIKI Golden West Savings and Loan Association was purchased in 1963 for $4 million by Herbert Sandler and Marion Sandler, through their newly created corporation, Golden West Financial. Some of the capital for the acquisition came from bank loans, with the balance coming from Marion’s family money.[2]
Marion Sandler, a former Wall Street analyst, and Herbert, a real estate attorney, would operate the company in tandem.[3] In 1968 the Sandlers took Golden West Financial public.[4] In 1969 Modesto Savings was acquired and became part of Golden West Savings.[5][6]
Growth in the 1970s and 1980s [edit]The expanding popularity of savings and loan corporations in the 1970s led the Sandlers to acquire World Savings in 1975.[6] World Savings had been growing with other mergers in Colorado, so this acquisition expanded Golden West Financial out of California and 107 offices. The corporation began operating all of its savings and loans offices under the name World Savings.[2]
Lessening restrictions on savings and loans by the United States Government in the early 1980s saw a rapid growth in the industry, and Golden West profited from it by careful examination of the market as it fluctuated and not over-extending its reach during the savings and loan crisis. Golden West continued to expand its portfolio, and remained marginally profitable for its investors.
The 1990s and 2000s [edit]Marion and Herbert Sandler continued to serve as co-CEOs, with Marion overseeing the operations and Herbert working on the lending practices side. In 1990 The New York Times called the company “the Nation’s Best-Run S.&L.” saying that “the core of their business is decidedly - some might say refreshingly - old-fashioned”.[4] As the mortgage market revived in the mid-1990s, Golden West Financial Corporation expanded its reach to the east coast of the United States as struggling savings and loan associations were put up for sale.
By 1995 Golden West held $31 billion in assets, making it the third largest mortgage lender in the country. In 1997 Catalyst, a nonprofit women’s research group, found that Golden West Financial had one of the highest percentages of women on their board of directors within any Fortune 500 company, with 5 women and 4 men.[7]
At the same time, the United States Government set up Freddie Mac to provide assistance for first time or low income home buyers who may not have received assistance from the private banking system. With diligence, Herbert Sandler devised an adjustable-rate mortgage system for Golden West’s holdings to provide as alternative to the other options available. The system and implementation was enormously successful.
In 2000 the bank was one of the highest rated stocks in the industry. Golden West was mentioned industry-wide in a positive light, once described as “They are in a sweet spot right now in the mortgage business, and that is driving extraordinary earnings compared to other thrifts. They are the best ARM lender, and they have superior interest rate management”.[8] As with the late 1980s and early 1990s, Golden West continued to expand assets and lending opportunities during the market decline after a burst of refinancing.
In 2006, Golden West Financial was named the “Most Admired Company” in the mortgage services business by Fortune magazine.[9] By the time Wachovia announced its acquisition in 2006, Golden West Financial had over $125 billion in assets and 11,600 employees.[10]
Takeover by Wachovia [edit]The Sandlers, who had run the company for forty-three years, were ready to retire and focus on philanthropy.
In 2006, they agreed to acquisition of Golden West Financial and its thrift, World Savings, by Wachovia Bank, The acquisition gave Wachovia an additional 285-branch network spanning 10 states. Wachovia greatly raised its profile in California, where Golden West held $32 billion in deposits and operated 123 branches.[10] Wachovia also picked up about $122 billion in option adjustable rate mortgages.[11]
The acquisition was announced on on 7 May 2006, with a price of a little under $25.5 billion.[10][12] The merger was completed in mid-2008.[13]
The subprime mortgage crisis caused the timing of the acquisition by Wachovia to harm that company’s financial situation.[11]
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 which the company had been resisting for years: it began to write loans at an annual interest rate of just 1%, with correspondingly low monthly payments. World Savings previously did not allow rates so low.
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.[14]
Wachovia CEO G. Kennedy “Ken” Thompson described Golden West as a “crown jewel”.[15]But investors did not react positively to the deal at the time.
After the takeover was completed in 2008, some analysts said that Wachovia purchased Golden West at the peak of the US housing boom, and that its mortgage-related problems were the ultimate factor in Wachovia’s fall.[16]
On the October 4, 2008 episode of Saturday Night Live the show lampooned the Wachovia takeover of Golden West Financial as part of a segment on the financial bailout. Darrell Hammond, as Herb Sandler, states that “My wife and I had a company which aggressively marketed subprime mortgages, and then bundled them as securities to sell to banks such as Wachovia. Today, our portfolio’s worth almost nothing, though, at one point, it was worth close to $19 billion.”[17] In response to the show, the real Herb Sandler said that he’s been “listening to this crap for two years” and “we are being unfairly tarred.”[18][19]
The Congressional Hispanic Institute, Inc, is an entity organized by Cong Joe Baca (D-Cali) in his capacity as head of the Congressional Hispanic Caucus.
Cong Baca created "HOGAR" (Spanish for home) in 2003 to work with the mortgage industry, F/M, lenders, banks and latino community groups to increase mortgage lending to what savvy observers consider to be unqualified Latinos.
"HOGAR" colluded w/ Cong Baca in what was to become a massive bilking of taxpayers. Cong Baca calculatedly hyped the fact that the national Latino homeownership rate was 47%, compared with 68% for the overall population.
HOGAR was coached to call the figure "alarming," and to say "a concerted effort was required to ensure that by the end of the decade Latinos will share equally in the American Dream of home ownership."
HOGAR and Cong Baca conned the public, failing to note that most of the "dreamers" were illegals, citizens of Third World countries who had violated US borders.
Predictably, HOGAR colluded w/ co-conspirators which included:
(a) shaky mortgage companies that ran into big trouble;
(b) Fannie Mae and Freddie Mac, both now under federal control after billions in taxpayer bailouts;
(c) Countrywide Financial Corp., sold to Bank of America Corp;
(d) Washington Mutual Inc., taken over by the US government and sold to J.P. Morgan Chase & Co.; and,
(e) New Century Financial Corp. and Ameriquest Mortgage Corp, both now defunct, killed by defaulted subprime Latino mortgages.
HOGAR's ties to the subprime mortgage industry were substantial. Bribery and self-dealing were rampant:
<><> Companies that donated $150,000 to Cong Baca got the right to have their own research fellow who would conduct fraudulent studies, which were cunningly used by industry lobbyists to pump lending.
<><> Bribery and extortion in the form of $100,000 annual donations to Cong Baca, for which HOGAR provided phony news releases from Cong Baca's Hispanic Caucus promoting a lender's commercial products to the Latino market,
<><> The most shocking example of bribery well-substantitated by Hogar's literature..... HOGAR announced it worked with Freddie Mac on a self-serving two-year examination of Latino homeownership in 63 congressional districts.
The "study" found Hispanic ownership on the rise thanks to "new flexible mortgage loan products" that the industry was adopting at the urging of Cong Baca's collusive coterie.
<><> HOGAR conned lenders into even more lenient down-payment and underwriting standards.
<><> As the subprime debacle unfolded, HOGAR declined repeated requests for comment despite the economic havoc their activities precipitated.
The mortgage schemes demonstrated the criminal activities of border violators with multiple identities---perhaps violent, terrorist-connected foreigners---colluding and conspiring to defraud private companies and public entities. And mortgage racketeering enterprises which employed sub rosa finance and business practices to carry out deceptions and frauds.
The alleged ring of swindlers---a Congresman, individuals with multiple identities, banks, insurance companies, mortgage brokers--might be charged with cheating the US govt, taxpayers and bank share holders out of hundreds of millions of dollars via an elaborate web of mortgage and bank frauds.
The mortgage Dreamers used multiple phony identities, fraudulent Social Security numbers, purchased from identity forgers in order to obtain govt-subsidized benefits.
L/E will find that individuals with multiple identities obtained fraudulent mortgages then flipped the houses at ever-higher prices to family member who then absconded to foreign countries, sticking banks (and taxpayers) with hundreds of millions in fraudulent mortgages.
BACKGROUND A Wall Street Journal investigative report related that, according to the Federal Financial Institutions Examination Council examination of the borrowing spree, uncovered financial schemes by low-income housing groups, Hispanic lawmakers, a congressional Hispanic housing initiative, mortgage lenders and brokers, all colluding in fraduent schemes to increase homeownership among Latinos with forged documents which enabled massive fraud.
This was not simply the mortgage market at work. It was fueled by avarice, greed, and Congressional enabling fraudulent practices. In 2005 alone, mortgages to Hispanics jumped by 29%; Latinos with multiple fraudulent identities in low-paying jobs obtained subprime mortgages for prime properties---soaring to 169%.
(Research provided by Wall Street Journal. Some material excerpted from the NY Times).