External links
- Archived official website
- "Golden West Financial Corporation History". FundingUniverse.
| International | |
|---|---|
| National | |
| Company type | Public |
|---|---|
| NYSE: GDW | |
| Industry | Financial services |
| Predecessors |
|
| Founded | 1963 in Oakland, California |
| Founder | Herbert and Marion Sandler |
| Defunct | 2006 |
| Fate | acquired by Wachovia |
| Successor | Wachovia |
| Headquarters | Oakland, California , US |
Number of locations | 283 (2005) [1] |
Area served | Arizona, California, Colorado, Florida, Illinois, Kansas, Nevada, New Jersey, New York, and Texas |
| $1.5 billion [1] | |
| Total assets | $124.6 billion [1] |
Number of employees | 11604 [1] |
| Subsidiaries | Atlas Securities; World Savings and Loan |
| Website | goldenwestworld |
Golden West Financial was the second-largest savings and loan association in the United States, operating branches under the name of World Savings Bank.
The business was founded in 1929 as Golden West Savings and Loan Association, a small savings and loan in Oakland, California. [2] Golden West Financial's subsidiary, World Savings, was established in Madera, California, in 1912. [2]
Golden West Savings and Loan Association was purchased in 1963 for $4 million by Herbert Sandler and Marion Sandler, through their newly created corporation, Golden West Financial. Some of the capital for the acquisition came from bank loans, with the balance coming from Marion's family money. [2] Marion Sandler, a former Wall Street analyst, and Herbert, a real estate attorney, would operate the company in tandem. [3] In 1968, the Sandlers took Golden West Financial public. [4] In 1969, Modesto Savings was acquired and became part of Golden West Savings. [5] [6]
The expanding popularity of savings and loan corporations in the 1970s led the Sandlers to acquire World Savings in 1975. [6] World Savings had been growing with other mergers in Colorado, so this acquisition expanded Golden West Financial out of California and 107 offices. The corporation began operating all of its savings and loans offices under the name World Savings. [2]
Lessening restrictions on savings and loans by the United States government in the early 1980s saw a rapid growth in the industry, and Golden West profited from it by careful examination of the market as it fluctuated and not over-extending its reach during the savings and loan crisis. Golden West continued to expand its portfolio, and remained marginally profitable for its investors.
Marion and Herbert Sandler continued to serve as co-CEOs, with Marion overseeing the operations and Herbert working on the lending practices side. In 1990, The New York Times called the company "the Nation's Best-Run S.& L." saying that "the core of their business is decidedly—some might say refreshingly—old-fashioned". [4] As the mortgage market revived in the mid-1990s, Golden West Financial Corporation expanded its reach to the east coast of the United States as struggling savings and loan associations were put up for sale. By 1995, Golden West held $31 billion in assets, making it the third largest mortgage lender in the country. In 1997, Catalyst, a nonprofit women's research group, found that Golden West Financial had one of the highest percentages of women on their board of directors within any Fortune 500 company, with 5 women and 4 men. [7]
At the same time, the United States government set up Freddie Mac to provide assistance for first time or low income home buyers who may not have received assistance from the private banking system. With diligence, Herbert Sandler devised an adjustable-rate mortgage system for Golden West's holdings to provide as alternative to the other options available. The system and implementation was enormously successful.
In 2000, the bank was one of the highest-rated stocks in the industry. Golden West was mentioned industry-wide in a positive light, once described as "They are in a sweet spot right now in the mortgage business, and that is driving extraordinary earnings compared to other thrifts. They are the best ARM lender, and they have superior interest rate management". [8] As with the late 1980s and early 1990s, Golden West continued to expand assets and lending opportunities during the market decline after a burst of refinancing.
In 2006, Golden West Financial was named the "Most Admired Company" in the mortgage services business by Fortune magazine. [9] By the time Wachovia announced its acquisition in 2006, Golden West Financial had over $125 billion in assets and 11,600 employees. [10]
The Sandlers, who had run the company for forty-three years, were ready to retire and focus on philanthropy.
In 2006, they agreed to acquisition of Golden West Financial and its thrift, World Savings, by Wachovia Bank, The acquisition gave Wachovia an additional 285-branch network spanning 10 states. Wachovia greatly raised its profile in California, where Golden West held $32 billion in deposits and operated 123 branches. [10] Wachovia also picked up about $122 billion in option adjustable rate mortgages. [11]
The acquisition was announced on May 7, 2006, with a price of a little under $25.5 billion. [10] [12] The merger was completed in October 2006. [13]
The subprime mortgage crisis caused the timing of the acquisition by Wachovia to harm that company's financial situation. [11] World Savings lending volume dipped again in 2006 shortly after the sale to Wachovia was initiated. This prompted World Savings to attract more borrowers by taking a step which the company had been resisting for years: it began to write loans at an annual interest rate of just 1%, with correspondingly low monthly payments. World Savings previously did not allow rates so low.[ citation needed ] The steep losses generated by these Golden West/World Savings loans ended up crippling Wachovia, resulting in its eventual purchase by Wells Fargo in 2008. [14]
While World Savings continued to scrutinize borrowers' ability to manage increased payments, the move to rock-bottom rates lured customers whose financial reliability was harder to verify. [15]
Wachovia CEO G. Kennedy "Ken" Thompson described Golden West as a "crown jewel". [16] But investors did not react positively to the deal.
After the takeover was completed in 2006, some analysts said that Wachovia purchased Golden West at the peak of the US housing boom, and that its mortgage-related problems were the ultimate factor in Wachovia's fall. [17]
The October 4, 2008 episode of Saturday Night Live lampooned the Wachovia takeover of Golden West Financial during a segment on the financial bailout. Darrell Hammond, as Herb Sandler, states that "My wife and I had a company which aggressively marketed subprime mortgages, and then bundled them as securities to sell to banks such as Wachovia. Today, our portfolio's worth almost nothing, though, at one point, it was worth close to $19 billion." [18] In response to the show, the real Herb Sandler said he had been "listening to this crap for two years" and "we are being unfairly tarred." [19] [20]
| International | |
|---|---|
| National | |
Washington Mutual, Inc. was an American savings bank holding company based in Seattle. It was the parent company of Washington Mutual Bank, which was the largest savings and loan association in the United States until its collapse in 2008.
A savings and loan association (S&L), or thrift institution, is a financial institution that specializes in accepting savings deposits and making mortgage and other loans. While the terms "S&L" and "thrift" are mainly used in the United States, similar institutions in the United Kingdom, Ireland and some Commonwealth countries include building societies and trustee savings banks. They are often mutually held, meaning that the depositors and borrowers are members with voting rights, and have the ability to direct the financial and managerial goals of the organization like the members of a credit union or the policyholders of a mutual insurance company. While it is possible for an S&L to be a joint-stock company, and even publicly traded, in such instances it is no longer truly a mutual association, and depositors and borrowers no longer have membership rights and managerial control. By law, thrifts can have no more than 20 percent of their lending in commercial loans—their focus on mortgage and consumer loans makes them particularly vulnerable to housing downturns such as the deep one the U.S. experienced in 2007.
The savings and loan crisis of the 1980s and 1990s was the failure of 32% of savings and loan associations (S&Ls) in the United States from 1986 to 1995. An S&L or "thrift" is a financial institution that accepts savings deposits and makes mortgage, car and other personal loans to individual members.
The Community Reinvestment Act is a United States federal law designed to encourage commercial banks and savings associations to help meet the needs of borrowers in all segments of their communities, including low- and moderate-income neighborhoods. Congress passed the Act in 1977 to reduce discriminatory credit practices against low-income neighborhoods, a practice known as redlining.
Herbert Sandler was a co-CEO of Golden West Financial Corporation and World Savings Bank. He died on June 4, 2019, at the age of 87. Golden West Financial's lending practices had Time magazine include Sandler and his wife Marion in their list of the "25 People to Blame for the Financial Crisis".
National City Corporation was a regional bank holding company based in Cleveland, Ohio, founded in 1845; it was once one of the ten largest banks in America in terms of deposits, mortgages and home equity lines of credit. Subsidiary National City Mortgage is credited for doing the first mortgage in America. The company operated through an extensive banking network primarily in Ohio, Illinois, Indiana, Kentucky, Michigan, Missouri, Pennsylvania, Florida, and Wisconsin, and also served customers in selected markets nationally. Its core businesses included commercial and retail banking, mortgage financing and servicing, consumer finance, and asset management. The bank reached out to customers primarily through mass advertising and offered comprehensive banking services online. In its last years, the company was commonly known in the media by the abbreviated NatCity, with its investment banking arm even bearing the official name NatCity Investments.
Bank of America Home Loans is the mortgage unit of Bank of America. It previously existed as an independent company called Countrywide Financial from 1969 to 2008. In 2008, Bank of America purchased the failing Countrywide Financial for $4.1 billion. In 2006, Countrywide financed 20% of all mortgages in the United States, at a value of about 3.5% of the United States GDP, a proportion greater than any other single mortgage lender.
First Union Corporation was a bank holding company that provided commercial and retail banking services in eleven states in the eastern U.S. First Union also provided various other financial services, including mortgage banking, credit card, investment banking, investment advisory, home equity lending, asset-based lending, leasing, insurance, international and securities brokerage services and private equity through First Union Capital Partners, and through other subsidiaries.
H.F. Ahmanson & Co. was a California holding company named after Howard F. Ahmanson Sr. It was best known as the parent of Home Savings of America, once one of the largest savings and loan associations in the United States.
Chevy Chase Bank, F.S.B. was the largest locally based banking company in the Washington Metropolitan Area. It was acquired by Capital One in February 2009, and rebranded as Capital One Bank in September 2010. Despite its name, Chevy Chase Bank was a federally chartered thrift regulated by the Office of Thrift Supervision, rather than a bank.
A.G. Edwards, Inc. was an American financial services holding company; its principal wholly owned subsidiary was A.G. Edwards & Sons, Inc., which operated as a full-service securities broker-dealer in the United States and Europe. The firm was acquired by Wachovia to be folded into Wachovia Securities; Wachovia was subsequently acquired by Wells Fargo, and the securities division was folded into Wells Fargo Advisors. The firm provided securities and commodities brokerage, investment banking, trust services, asset management, financial and retirement planning, private client services, investment management, and other related financial services to individual, governmental, and institutional clients.
IndyMac, a contraction of Independent National Mortgage Corporation, was an American bank based in California that failed in 2008 and was seized by the United States Federal Deposit Insurance Corporation (FDIC).
The subprime mortgage crisis impact timeline lists dates relevant to the creation of a United States housing bubble and the 2005 housing bubble burst and the subprime mortgage crisis which developed during 2007 and 2008. It includes United States enactment of government laws and regulations, as well as public and private actions which affected the housing industry and related banking and investment activity. It also notes details of important incidents in the United States, such as bankruptcies and takeovers, and information and statistics about relevant trends. For more information on reverberations of this crisis throughout the global financial system see 2007–2008 financial crisis.
The government interventions during the subprime mortgage crisis were a response to the 2007–2009 subprime mortgage crisis and resulted in a variety of government bailouts that were implemented to stabilize the financial system during late 2007 and early 2008.
Wachovia was a diversified financial services company based in Charlotte, North Carolina. Before its acquisition by Wells Fargo and Company in 2008, Wachovia was the fourth-largest bank holding company in the United States, based on total assets. Wachovia provided a broad range of banking, asset management, wealth management, and corporate and investment banking products and services. At its height, it was one of the largest providers of financial services in the United States, operating financial centers in 21 states and Washington, D.C., with locations from Connecticut to Florida and west to California. Wachovia provided global services through more than 40 offices around the world.
Marion Osher Sandler was the co-CEO of Golden West Financial Corporation and World Savings Bank. In 2004, after 43 years running Golden West Financial Corporation, she was described by the Columbia School of Journalism as "the first and longest-serving woman chief executive officer in the United States."
The Center for Responsible Lending (CRL) is a nonprofit organization research and policy group based in Durham, North Carolina, United States. Its stated purpose is to educate the public about financial products and to push for policies that curb predatory lending. On its website and elsewhere, CRL describes its mission as that of "protecting homeownership and family wealth by working to eliminate abusive financial practices." CRL is affiliated with the Center for Community Self-Help.
The National Mortgage Crisis of the 1930s was a Depression-era crisis in the United States characterized by high-default rates and soaring loan-to-value ratios in the residential housing market. Rapid expansion in the residential non-farm housing market through the 1920s created a housing bubble inflated in part by ad hoc innovation on the part of the four primary financial intermediaries – commercial banks, life insurance companies, mutual savings banks, and Building & Loans (thrifts). As a result, the federal overhaul stemming from New Deal legislation gave rise to a paradigmatic shift in mortgage lending, popularizing longer-term maturity, fully amortizing mortgages and creating a thick secondary market for mortgage-related securities.
SoFi Technologies, Inc. is an American personal finance and financial technology company. Founded in 2011 at Stanford University, it operates as a direct bank and supports other financial institutions through its technology platform. As of 2024, SoFi reports 9.4 million customers and 160 million platform accounts.
American Savings and Loan Association was an American savings and loan based in Stockton, California. In 1988 it was the largest thrift failure and the federal government's costliest resolution during the savings and loan crisis at an estimated cost of $5.4 billion.
