Bloomberg News

Marion Sandler, Home Lender Who Made Billions, Dies at 81

June 04, 2012

Marion Sandler, Mortgage Lender Who Made Billions

Marion Sandler attends a shareholders meeting in Oakland, California, in this 2006 file photo. Photographer: Marcio Jose Sanchez/AP

Marion Sandler, part of a husband- and-wife team that earned billions from lending during the housing boom, then fought back against critics of the adjustable-rate mortgage they helped popularize, has died. She was 81.

She died on June 1 at her home in San Francisco, according to an obituary on her website. No cause was given.

As one of Wall Street’s first female securities analysts, Sandler was drawn to the business model of the savings and loan, and she went on to make her fortune running one with her husband, Herbert.

As co-chairmen and co-chief executive officers of Golden West Financial Corp. -- which became the second-largest thrift in the U.S., after Washington Mutual -- the Sandlers were in the vanguard of untraditional home lending. The “Pick-A-Pay” adjustable-rate mortgage marketed by Golden West through its World Savings Bank unit was a so-called payment-option ARM, which allowed borrowers to make artificially low monthly payments, increasing the principal they owed.

As Golden West prospered, so did the Sandlers, who became fixtures on lists of the best-paid CEOs in America. Fortune magazine surveys in 2003, 2005 and 2006 named Golden West the most admired mortgage-services company in America; American Banker ranked the Sandlers No. 8 on a list of Top 10 CEOs in 2006.

Investigative Journalism

When Wachovia Corp. bought Golden West in 2006 for $24.2 billion, the Sandlers walked away with $2.4 billion for their 10 percent stake. They directed part of their wealth to philanthropy, including the creation of the nonprofit investigative journalism website ProPublica.

The financial crisis of 2008, triggered by the collapse of the subprime-mortgage market, cast them in a new, harsh light.

Wachovia, Golden West’s purchaser, lost 89 percent of its market value from a high in February 2007 as a result of mounting losses on option ARMs, leading to its sale to Wells Fargo & Co. (WFC:US), announced in October 2008.

Time magazine in 2009 named the Sandlers to its list of “25 people to blame for the financial crisis,” saying the couple introduced the option ARM in the 1980s and then peddled it “with increasing zeal and misleading advertisements over the next two decades.” A skit on NBC’s “Saturday Night Live” parodied the Sandlers as “people who should be shot” for their roles in the financial meltdown.

‘High-Quality Mortgages’

The Sandlers insisted they had been careful, responsible lenders who had tailored their loans to the needs and payment abilities of clients. In a lengthy rebuttal to Time, they said Golden West under their stewardship had differed from competitors by keeping its loans on its books, rather than packaging and selling them as securities.

“In essence, we focused on high-quality mortgages that would work for borrowers, since our business model depended on keeping loan losses as low as possible,” they wrote. “While we maintained our traditional, conservative portfolio business model, most every major mortgage lender in the country shifted to a completely different model: mortgage banking.”

In a 2010 interview with the congressionally appointed Financial Crisis Inquiry Commission, Herbert Sandler blamed independent brokers -- “whores of the world,” in his words -- for turning low-interest-rate loans into tools to entice borrowers, who ended up hurt by hidden fees.

“They took a loan that was borrower-friendly and made it into a toxic loan, which we warned regulators about again and again and again,” Sandler said.

‘Payment Shocks’

The commission, in its final report, offered some support to that view.

It said lenders including Countrywide Financial Corp. and Washington Mutual Inc. had taken the payment-option ARM and changed it “in ways that made payment shocks more likely,” such as using lower “teaser” rates, offering loans as high as 100 percent of value and shortening the period of time until interest rates were raised.

The Sandlers pledged to give away their entire net worth through philanthropy, beginning with a $1.3 billion grant to their foundation in 2006.

“Passing down fortunes from generation to generation can do irreparable harm,” they wrote in joining The Giving Pledge, a movement started by Warren Buffett with Bill and Melinda Gates in 2010. “In addition, there is no way to spend a fortune. How many residences, automobiles, airplanes and other luxury items can one acquire and use?”

Wellesley Graduate

Marion Anna Osher was born on Oct. 17, 1930, and grew up in Biddeford, Maine, the only daughter among the five children of Samuel Osher and the former Leah Lazarovich. Her parents, Russian Jewish immigrants from Lithuania and Russia, had settled in Biddeford, a mill town near Portland, and ran a hardware business.

She graduated from Wellesley College in 1952 and earned her master’s in business administration from New York University in 1958. She worked for two years as a buyer at Bloomingdale’s before landing a job on Wall Street, as a securities analyst at Dominick & Dominick Inc. She was the first woman hired by the firm who wasn’t a receptionist, according to Douglas Branson’s 2010 book, “The Last Male Bastion: Gender and the CEO Suite in America’s Public Companies.”

As a summer renter in the Hamptons, on Long Island, she met Herbert Sandler through a mutual friend, according to a 2006 profile of the couple in the San Francisco Chronicle. As their courtship advanced, Herbert moved into her apartment on Fifth Avenue. They married in Boston on March 26, 1961, and went on to have two children, Susan and James -- who, they said in 2010, fully agreed with their plan to give away their fortune to charity.

Buying Lender

In her work at Dominick & Dominick, then at Oppenheimer Co., Sandler focused on the savings-and-loan industry, and the couple decided to move to fast-growing California to run one.

Backed by Marion’s brother, Bernard Osher -- who would go on to own fine-art auction house Butterfield & Butterfield -- the Sandlers in 1963 spent $3.8 million to buy Oakland, California-based Golden West Savings & Loan Association, which had one branch, in Castro Valley. They took the company public in 1968.

“We were a small institution, and we were very hands-on,” Marion Sandler told the San Francisco Chronicle in 2006. “It was such fun.”

In 1975, the Sandlers merged Golden West with World Savings under a parent company, Golden West Financial Corp. From 1981 -- when deregulation opened the door to option ARMs -- to 2005, Golden West issued about $274 billion in the Pick-A-Pay option ARMs, according to the report of the financial crisis commission.

Philanthropic Beneficiaries

It was only after Wachovia bought Golden West in 2006, “and the housing market soured,” that the Pick-A-Pay portfolio produced significant foreclosures, the commission found, with failed loans jumping to 2.69 percent by September 2008 from 0.04 percent before that.

In their philanthropy, the Sandlers supported social and political organizations including Human Rights Watch, the American Civil Liberties Union and Acorn, the anti-poverty group that had to shut its doors in 2010. They helped establish the Center for Responsible Lending and, in 2003, the Center for American Progress, the Washington-based group dedicated to “progressive ideas and action” and led by John Podesta, who was White House chief of staff under President Bill Clinton.

ProPublica, their pioneering foray into nonprofit investigative journalism, opened in 2008 under the leadership of Paul Steiger, former managing editor of the Wall Street Journal. The Sandlers funded the organization with $10 million annually.

ProPublica’s Pulitzer

Its work was featured in outlets including the New York Times, the Los Angeles Times, CBS’s “60 Minutes” and PBS’s “Frontline.” A ProPublica investigation of a New Orleans hospital’s life-and-death decisions after Hurricane Katrina won a 2010 Pulitzer Prize for investigative reporting.

“Marion participated actively in every ProPublica board meeting until the most recent one; only her last illness could keep her away,” the website’s editors wrote in a tribute. “Usually in such sessions, she was knitting except when speaking; always, she was listening carefully, and her points were as tightly focused as her stitches.”

To contact the reporter on this story: Laurence Arnold in Washington at

To contact the editor responsible for this story: Charles W. Stevens at

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