SAN FRANCISCO (AP) – Once hailed for running their savings-and-loan company like an endearing mom-and-pop shop, Herb and Marion Sandler are now being vilified as ruthless home lenders who helped destroy Wachovia Corp. and contributed to the financial decay that led to the U.S. government’s $700 billion rescue plan to buy rotten mortgages.

After deflecting the media for months, Herb Sandler defended his lending record in an interview Sunday. He also tried to make a case for why Wachovia shareholders should be demanding substantially more than the $14.8 billion that Wells Fargo & Co. has offered for the company.

Sandler, 77, spoke to The Associated Press in the San Francisco office of his family’s charitable foundation the morning after NBC’s “Saturday Night Live” broadcast a skit deriding the Sandlers as predatory lenders who had duped unsophisticated borrowers and Wachovia, too. A caption shown during the sketch skewered the Sandlers as “people who should be shot.”

Although the timing of the interview was coincidental, Sandler was seething after watching a replay of the skit on the Internet.

“I have been listening to this crap for two years,” Sandler said. “We are being unfairly tarred. People have been telling us to speak out for some time, but we didn’t think it was appropriate. That was clearly a mistake.”

The public ridicule represents a 180-degree turn for the Sandlers, who were considered to be the voices of reason while they steered Golden West Financial Corp. and its subsidiary, World Savings, through a period of financial recklessness that led to the failure of thousands of other S&Ls in the 1980s and 1990s.

Golden West never strayed from its staid lending approach while the Sandlers scolded others for their risky investments in commercial real estate and exotic business ventures.

Herb Sandler agrees with his critics on one point: He and Marion, who were Golden West’s co-chief executives for more than 40 years, couldn’t have picked a better time to sell the company than when they closed their $24.3 billion deal with Wachovia in October 2006.

After years of double-digit increase, home prices began to crumble once Wachovia took over, and now the Charlotte, N.C.-based bank is in such deep trouble that it has agreed to be sold to Wells Fargo for just $7 per share – nearly 90 percent below the company’s stock price at the time of the Golden West takeover.

Citigroup Inc. is fighting in court to enforce an earlier agreement that would allow it to buy Wachovia’s banking operations for $2.1 billion, or $1 per share.

The Sandlers were the biggest winners in the Golden West sale, collecting Wachovia stock that was worth more than $2 billion when the deal closed. More than $1 billion of the stock was used to fund the couple’s charitable foundation. Herb declined to say how much of the stock the couple still owns, saying only they still have enough shares to care what happens to Wachovia.

Toward that end, Sandler hopes to convince Wachovia’s shareholders that the bank’s mortgage problems aren’t as severe as they might seem, especially now that the federal government is prepared to take some of the deteriorating mortgages off lenders’ books.

Once the clean-up work is complete, Sandler believes Wachovia will be worth $60 billion to $100 billion. Although he thinks Wells should be pressured to pay more, Sandler says it’s preferable to the Citigroup bid, which was negotiated with the help of federal regulators.

Besides trying to fetch more money for Wachovia, Sandler wants to burnish his and his wife’s legacy.

Taking advantage of regulations passed in 1981, World Savings had thrived for decades by specializing in adjustable rate mortgages that gave borrowers the option of deferring the interest due on their monthly payments. These so-called option-ARMs have been widely derided for driving up the amount that borrowers owed on their loans, ultimately saddling them with payments that they can’t afford.

But Sandler contends the troubles cropping up in World’s option-ARM, or “pick-a-pay,” portfolio haven’t been severe enough to drag down Wachovia. The bank has charged off about $850 million of the $122 billion pick-a-pay portfolio so far, but the bank’s management has indicated the losses could rise to $12 billion.

If Wells Fargo prevails in its effort to buy Wachovia, it intends to take a $32 billion hit on the pick-a-pay portfolio – an action that implies the loans, on average, are only worth 74 cents on the dollar.

Sandler contends the loss projections are grossly exaggerated and rely on improbable Depression-era assumptions about the U.S. economy. He doubts the losses on World’s former mortgage portfolio will rise above $10 billion, largely because none of the loans were made to borrowers with shoddy, or “subprime,” credit records.

Sandler said World’s pick-a-pay loans were made under the same qualifying standards that had been in effect during the previous 25 years when the savings and loan’s losses were among the lowest in the industry and the Sandlers were consistently praised for their prudence.

“We had a great track record for 40 years,” Sandler said. “If this product was so dangerous, how could that be? There is something anomalous about that, isn’t there?”

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