Remember the controversial story a few months ago, in which NBC abruptly pulled-down a spoof that playfully poked fun at Democrats? At first, controversy erupted because many of us assumed that, while criticizing Sarah Palin was “fair game,” NBC decided they had gone too far in actually criticizing their beloved Democrats.
It turns out that the Democrats weren’t the ones complaining. Instead, it was liberal Herbert Sandler — founder of the “Center for Responsible Lending” — who got the skit pulled. Here’s an excerpt:
Herbert Sandler: My wife and I had a company which aggressively marketed subprime mortgages, and then bundled them into securities to sell to banks such as Wachovia. Today, our portfolio is worth almost nothing — though at one point, it was worth close to $19 billion.
Pelosi: My God. I am so sorry. Were you able to sell it for anything.
Herbert Sandler: Yes, for $24 billion.
Pelosi: I see. So in that sense, you’re not so to speak, actual victims.
Herbert Sandler (chuckling): Oh, no. That would be Wachovia Bank.
Marion Sandler: Actually, we’ve done quite well. We’re very happy.
Sandler and his wife founded the Center for Responsible Lending, a think tank dedicated to “putting an end to predatory lending practices.” Sadly, though, their firm did not live up to this mission statement: it allowed borrowers to pay less than the interest due on their loan each month, resulting in their never actually paying off any of the principal. In short, because of the Sandlers, poor people continue to accumulate more and more debt that they never pay off.
A recent article in the NYT highlighted how this once highly-regarded liberal has shown himself to be a hypocrite of incredible proportion:
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.
Pick-A-Pay allowed homeowners to make monthly mortgage payments that were so small they did not cover their interest charges. That meant the total principal owed would actually grow over time, not shrink as is normally the case.
Now held by an estimated two million homeowners, the option adjustable rate mortgage will be at the forefront of a further wave of homeowner distress that could greatly delay or even derail an economic recovery, mortgage industry analysts say.
The Wachovia Corporation, which bought the Sandlers’ bank two years ago, was so battered by the souring portfolio of World Savings that it began writing off losses now projected at tens of billions of dollars and eventually stopped offering option ARMs.
Through it all, the Sandlers have maintained they did nothing wrong beyond misjudging the real estate bubble.
But something that appeared a couple of days ago demonstrated just how powerful this couple is. The article was printed on December 25, yet on January 6, the paper posted the following correction:
Correction: January 6, 2009
A headline on Dec. 25 with an article about Herbert and Marion Sandler, bankers and philanthropists whose World Savings Bank originated a type of adjustable-rate mortgage called Pick-a-Pay that has led to many foreclosures as the real estate market and the economy collapsed, described incorrectly the consequences to the Sandlers of the criminal and legal investigations of the practices of the bank, which they sold to Wachovia in 2006. As the article noted, the Sandlers were once trusted mortgage pioneers and now face scrutiny, but they are not “pariahs.”
Apparently the same PR machine that forced SNL to pull down their skit — something the Democratic Party couldn’t even have made happen — also has the power to force the New York Times to change its tune.
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