Herb and Marion Sandler, who sold S&L Golden West To Wachovia (WB) for $24 billion at the peak of the housing frenzy, are tired of being blamed for the firm’s collapse. And they have a point. The guy who should be blamed is former Wachovia CEO Ken Thompson, who bought Golden West for $24 billion.
After last night’s SNL “CSPAN” skit described the Sandlers as “people who should be shot,” (see video below). Herb couldn’t take it anymore:
“I have been listening to this crap for two years,” Sandler said. “We are being unfairly tarred.”…
Sandler contends the troubles cropping up in World’s option-ARM, or “pick-a-pay,” portfolio haven’t been severe enough to drag down Wachovia. The bank has charged off about $850 million of the $122 billion pick-a-pay portfolio so far, but the bank’s management has indicated the losses could rise to $12 billion.
If Wells Fargo prevails in its effort to buy Wachovia, it intends to take a $32 billion hit on the pick-a-pay portfolio — an action that implies the loans, on average, are only worth 74 cents on the dollar.
Sandler contends the loss projections are grossly exaggerated and rely on improbable Depression-era assumptions about the U.S. economy. He doubts the losses on World’s former mortgage portfolio will rise above $10 billion, largely because none of the loans were made to borrowers with shoddy, or “subprime,” credit records.
Sandler said World’s pick-a-pay loans were made under the same qualifying standards that had been in effect during the previous 25 years when the savings and loan’s losses were among the lowest in the industry and the Sandlers were consistently praised for their prudence.
“We had a great track record for 40 years,” Sandler said. “If this product was so dangerous, how could that be? There is something anomalous about that, isn’t there?”