Golden West co-founder Herb Sandler dies at 87, leaving complicated legacy

Register now

Herb Sandler, who along with his wife built a small California thrift into one of the nation’s largest mortgage lenders and then sold it just before the housing market crashed, died Tuesday in San Francisco. He was 87.

Sandler and his wife, Marion, ran Golden West Financial, the parent of World Savings Bank, for more than four decades before selling it in 2006 to Wachovia Corp. for $24 billion and turning their attention to philanthropy. Marion Sandler died in 2012.

The Sandlers founded the company in 1963 when, with a bank loan and support from family, they acquired a $34 million-asset Oakland, Calif., thrift. They took the company public in 1968, listed it on the New York Stock Exchange in 1971 and, by the time they sold it, Golden West was the second-largest savings and loan in the country, with $124 billion of assets, 285 branches and lending operations in 39 states.

For decades, Golden West was one of the industry’s most consistently profitable companies, generating compound annual earnings-per-share growth in excess of 20% for 35 straight years, according to Forbes. From the time it went public through its last year as an independent company, its stock price increased at an annual compound rate of 17%. Morningstar named the Sandlers “CEOs of the Year” in 2004 and Fortune magazine ranked Golden West as one of the nation’s most-admired mortgage lenders or most-admired savings institutions 10 different times.

The Sandlers’ stars dimmed, however, when the financial crisis hit and Wachovia began to suffer steep losses on loans originated by Golden West. The losses crippled Wachovia, and the bank was eventually rescued by Wells Fargo.

Many of the loans were so-called pick-a-pay loans, adjustable rate mortgages that gave borrowers the option of making a minimum monthly payment that did not cover interest on the loan, or making interest-only payments.

When property values nationwide plummeted for the first time, in 2007 and 2008, many homeowners were upside-down on their mortgages and fell into foreclosure. Though the Sandlers at that point were out of the banking business, they were heavily criticized for creating what were seen as toxic loan products that largely contributed to the mortgage meltdown.

Pick-a-pay loans have since been banned by banking regulators.

The Sandlers earned billions on the sale of Golden West and after they retired from banking they pledged to give the bulk of their fortune away. Among other ventures, their charitable foundation funded the launch of ProPublica, the investigative news organization, the Center for American Progress, a left-leaning think tank, and the Center for Responsible Lending. The foundation has also contributed hundreds of millions of dollars to medical research, environmental causes and human rights initiatives.

Herb Sandler was born in 1931 and grew up on New York’s Lower East Side. He graduated from high school at the age of 15, earned his undergraduate degree from City College of New York in 1951 and graduated from Columbia Law School three years later, according to an obituary posted on Sandler's website. After serving in the military for two years in Alaska and California, he returned to New York to practice law and in 1960 he met his future wife, then a banking and finance analyst on Wall Street, while on vacation in the Hamptons. The pair married in 1961.

Sandler is survived by his daughter, Susan Sandler, son James Sandler and two grandchildren.

For reprint and licensing requests for this article, click here.
Obituaries Mortgages ARMs Financial stress