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- The New York Times – Once Trusted Mortgage Pioneers, Now Pariahs
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. . . . 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.
Comment What is most interesting about this story is the history if it.
Back on October 4 NBC’s Saturday Night Live (SNL) did a skit on the recently passed financial bailout (now known as the the TARP). As explained here:
[The] sketch centered on how the economic bailout has affected those who have either squandered their money or have taken to predatory tactics to make more money. In the sketch, long-standing cast member Darrell Hammond and feature player Casey Wilson, played Herb and Marion Sandler, who were caricatured as predatory lenders who had scammed unsophisticated borrowers into purchasing homes that they could not afford and caused the downfall of Wachovia Bank and were referred to by 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.[7] 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.
The first picture below shows the real Mr. and Mrs. Sandler. The second is a screenshot linked to the unedited skit. The edited video on SNL’s website can be found here. We cannot find another example in the 30+ year history of SNL where a video was edited after the fact because those being parodied objected.
The Sandler’s sold World Savings (which owned the more widely known Golden West Financial) for $24 billion to Wachovia (their take, $2.4 billion). It is widely understood that World Saving’s underperforming portfolio of option ARMs was a major contributor to Wachovia’s woes and helped push them to the brink of failure. This forced the FDIC to arrange a merger with Citigroup before Wells Fargo made a better offer.
The Sandlers are very active in left-wing causes. They provide significant funding for moveon.org, ACORN, America Votes, Oceana and Human Right Watch. They were also significant contributors to the Democratic party and Barack Obama.
So, when the crisis was in full bloom, and before the election, the Sandlers were being portrayed as innocent victims and contributors to organizations that are fighting predatory practices. But now that the election is passed, they are being investigated as being part of the housing problem. But The New York Times waited until Christmas day, the day with the lowest readership of the year, to finally reveal this investigation and story.
Contrast this to last weekend’s New York Times story titled White House Philosophy Stoked Mortgage Bonfire where they said:
There are plenty of culprits, like lenders who peddled easy credit, consumers who took on mortgages they could not afford and Wall Street chieftains who loaded up on mortgage-backed securities without regard to the risk. But the story of how we got here is partly one of Mr. Bush’s own making, according to a review of his tenure that included interviews with dozens of current and former administration officials.
It seems like The Times has no problem blaming the administration for the housing crisis, but treads so carefully when Democratic donors might be to blame. They get blamed on Christmas day when no one is reading. They get to change SNL parodies of them where the administration would be skewered if they were to demand the same.
Why care? We have long argued that to have a credit/housing crisis this big, it is not the making of one or two bad decisions/actors. Rather, everyone is to blame. To start assigning blame based one one’s political beliefs only makes the problem worse.
Herb and Marion Sandler
Unedited Video
<Click on picture to watch unedited video>
- The New York Times – (Oct 9) Bailout Sketch Edited for the Web
NBC has taken the unusual step of editing the online version of a ”Saturday Night Live” skit. In a sketch about the government’s financial bailout package that was broadcast Saturday night, two characters identified as Herbert and Marion Sandler were labeled with on-screen words that read, ”People who should be shot.” Those two characters represented real-life business managers who had sold their savings-and-loan company (and its mortgage-backed securities) to Wachovia. NBC removed the skit from its Web site, nbc.com, on Tuesday; the video reappeared on Wednesday with the label removed. Explaining the change, NBC said in a statement, ”Upon review, we caught certain elements in the sketch that didn’t meet our standards.