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World Savings Collapse: An Insider's View Part I
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February 17, 2009
A mortgage sales representative at World Savings said he warned executives of the impending doom the company was bringing upon itself. Misleading and predatory loans were abound, he charged, and while executives dismissed his claims the company began its decent.
Amid Paul Bishop's warnings, the owner of World Savings was confidently telling reporters at the Wall Street Journal that the company was standing on solid ground. Bishop was perplexed, wondering if the owner and chairman of the company even knew of the predatory and unqualified loans that were being approved.
Herb and Marion Sandler, the owners of World Savings had an impeccable reputation for conservative lending when they began Golden West Financial in 1963. Perhaps they grew too big to oversee all the important transactions that were the backbone of the company, which transcended into World Savings with 285 branches.
The Sandlers, known as charitable people, began the advocacy group Center for Responsible Lending for low-income borrowers. How could they have been privvy to the deception surrounding the loans their company was originating and not stop it? Those questions remain.
Bishop states that he compared World Savings to Enron, a bloated bubble about to bust as soon as the housing market collapsed. Tomorrow we will look at Herb Sandler's letters to 60 minutes claiming that other employees would dispute what Bishop asserts.
Read story at CBS News
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