November 17, 2008
A husband and wife get into left-wing giving, in a big way
JOHN J. MILLER
When Wachovia bought Golden West Financial two years ago, the man who was the big bank’s CEO at the time couldn’t contain his enthusiasm. Kennedy Thompson hailed the $25 billion acquisition as a “grand slam home run” for Wachovia. Today the deal looks more like a strikeout in the bottom of the ninth.
The problem is that Golden West, then the nation’s second-largest savings-and-loan, had specialized in adjustable-rate mortgages — and it “had been lending to people with weaker credit scores in places where housing prices are in decline, such as California and Florida,” according to a recent story in the Wall Street Journal. In other words, the company was a ticking time bomb. Everything exploded in September.
If Wachovia purchased Golden West at precisely the wrong time, it follows that Golden West sold itself at precisely the right time. The biggest beneficiaries were Herbert and Marion Sandler, the husband-and-wife team who took over a small thrift in 1963 and turned it into one of the country’s most successful financial firms. They walked away from the sale with $2.4 billion, the bulk of which they tucked into a private foundation. Today, the Sandler Foundation is one of the leading sponsors of left-wing activism in the United States, spending millions upon millions of dollars on groups whose activities undermine the economic system that made the foundation’s existence possible.
The Sandlers met on Wall Street, where Herb was a real-estate lawyer and Marion analyzed securities. They married in 1961 and moved to California’s Bay Area. In 1963, they bought a savings-and-loan that had two branches, 25 employees, and $34 million in assets. For more than four decades, their story was one of vibrant growth. The Sandlers focused on making residential loans and earned a reputation for sound management and small-“c” conservatism. Their aversion to risk helped them avoid the S&L collapse of the 1980s. It even made them wary of ATMs: They refused to install these newfangled devices until the 1990s because they feared that the costs outweighed the benefits.
Herb was the able administrator and Marion the master marketer. They became darlings of the financial media, which delighted in their humble roots and the charming way they finished each other’s sentences. Marion became famous for knitting sweaters during business meetings. They were mom-and-pop tycoons. When they sold to Wachovia — at the time, Herb was 74 and Marion was 75 — Golden West had more than 11,000 workers and $125 billion in assets. The Sandlers owned a little more than 10 percent of the company.
After collecting their windfall, the Sandlers donated $1.3 billion to their San Francisco–based foundation. It was the second-largest philanthropic gift of 2006, behind only Warren Buffett’s headline-grabbing donation of $31 billion to the Bill & Melinda Gates Foundation. “If our dreams come true, we’ll give every last dollar away,” Herb had told Forbes a couple of years earlier. That’s what they set about doing.
The Sandlers weren’t rookies at philanthropy. In 1991, they had established the Sandler Family Supporting Foundation (it recently simplified its name to the Sandler Foundation). By 1997, the foundation was giving away $5.5 million annually, according to IRS records. It donated to middle-of-the-road charities such as the United Way and mainstream cultural institutions such as the San Francisco Museum of Modern Art. Yet a sizable portion of its funds bankrolled a hodgepodge of left-wing advocacy groups, including the Mexican American Legal Defense and Education Fund ($100,000), the National Women’s Law Center ($100,000), and the Center for Reproductive Law and Policy ($100,000).
This penchant was no surprise to anybody who knew the Sandlers, who are liberal partisans. Over the last decade or so, they’ve given hundreds of donations to Democratic campaigns around the country, totaling nearly $900,000, according to the Center for Responsive Politics. If you were a Democrat seeking federal office in recent years and you didn’t get a check from the Sandlers, you were doing something wrong. The couple was even more generous with left-wing “Section 527” advocacy committees (which are named for the legal provision creating them). In 2004, they provided more than $13 million to organizations such as Citizens for a Strong Senate ($8.5 million) and MoveOn.org ($2.5 million). Only three people, including George Soros, contributed more. In this cycle, their son-in-law, Steve Phillips, is chairman of Vote Hope, a political-action committee dedicated to the election of Barack Obama.
Yet their left-wing philanthropy has come to dwarf their political contributions. One of the Sandlers’ top recipients is Human Rights Watch — they’ve given it more than $23 million over the last decade. HRW protests the actions of repressive regimes from Burma to Congo, but its vision is fundamentally of the Left: It crusades for granting legal rights to terrorists, opposes capital punishment under any circumstances, and believes that abortion services are “first and foremost a human right.” The group manages to find oppression in the most unexpected places. In August, it published an extensive report on discipline problems in U.S. public schools — and many teachers and parents would be surprised to learn that the trouble isn’t a lack of discipline, but rather too much of it, in the form of corporal punishment: “Even students who are not punished find themselves in a hostile, violent environment designed to instill fear.” Sounds like Gitmo!
The runaway success of Golden West allowed the Sandlers to make plenty of other large grants. Last year, they backed the creation of ProPublica, a non-profit news service that promises to produce “investigative journalism in the public interest.” It remains to be seen what will come of this venture, though ProPublica’s board of directors and an advisory board of journalists are jam-packed with liberals. The Sandlers have pledged to support ProPublica with $10 million per year.
That’s just a drop in the bucket compared with what may lie ahead. The Sandlers don’t want their foundation to hoard its endowment. Instead, they want to shovel money out the door right now. “We need to get our spending up to between $200 and $250 million a year,” Herb Sandler told the New York Times in March. During the fiscal year that ended in June 2007, they gave away more than $80 million, up from $28 million a year earlier.
One of their longtime favorite causes is medical research on asthma (Marion suffers from it), but they have also continued to push an ideological agenda. “They’re among the biggest left-wing donors out there,” says Justin Wilson of ActivistCash.com, a watchdog group. Records indicate that the Sandlers have pumped more than $12 million into the American Civil Liberties Union. John Podesta’s Center for American Progress, which aspires to become a liberal counterweight to the Heritage Foundation, took in about $11 million. The foundation also gave nearly $7 million to the American Institute for Social Justice, which is closely tied to ACORN, the radical group of anti-corporate “community organizers.”
Topping all these groups, however, is the Center for Responsible Lending. Through the middle of last year, the Sandler Foundation had given nearly $20 million to the CRL, whose idea of “responsible lending” does not include loans that make economic sense for banks and their investors, but rather loans that fulfill the Left’s notion of social justice. The CRL is a professional grievance organization that concentrates on accusations of racial redlining. In recent weeks, its main project has been to defend the Community Reinvestment Act, which encouraged subprime lending, against charges that it played any role in Wall Street’s financial crisis. “These are the very people who have destroyed the American credit system,” says Jerry Bowyer, the chief economist at BenchMark Financial Network.
On October 4, Saturday Night Live featured a skit on the financial meltdown. Along the way, it lampooned the Sandlers as predatory lenders who had profited from the misfortunes of others. Herb Sandler was outraged: “We are being unfairly tarred,” he said in an Associated Press interview the next day. His frustration was understandable: A caption beneath the actors who played the couple read, “People who should be shot.” NBC later edited the segment, and these words are missing from the video on SNL’s website.
But Sandler was concerned about more than just a distasteful line. He argued that he and Marion were blameless in the annihilation of Wachovia. To be sure, nobody has accused them or Golden West of deceiving their buyers. Although a few financial analysts sounded alarms at the time of the deal, most regarded Golden West so highly that they didn’t see a downside. Then, about a year ago, Wachovia’s stock began its fatal nosedive. The crash came this September, as federal regulators stepped in to negotiate the sale of what was left of the bank.
Last year, in an interview with the Los Angeles Times, Herb Sandler explained his political impulses: “I am deeply opposed to wealthy people who exploit the poor, powerful people who prey on the weak, and government representatives who betray the trust of the people they supposedly represent.” He may want to visit the folks in Charlotte, N.C., where Wachovia has its headquarters and where the locals are worried about economic ruin. “Nobody around here knows what to expect,” says Warren Cooksey, a Charlotte city councilman who works for Wachovia. “There’s going to be some job loss. We’re hoping for a minimal impact, but there’s no sense in sugar-coating this.” Adds Tony Plath, a finance professor at the University of North Carolina at Charlotte: “For people who denigrate capitalism as much as the Sandlers do, they sure did benefit from it. Maybe they should give some of the money back — to Wachovia’s shareholders.”
Don’t count on it. Thanks to the Sandlers, Wachovia’s loss is the American Left’s gain.