But ARMs aren't frightening to Herbert M. Sandler. He and his wife, Marion O. Sandler, have been co-chairman and co-CEO of Golden West since they founded the company in 1963. For 25 years the pair has offered so-called pay-option ARMs, which let borrowers choose from among various low-payment scenarios each month, with the principal and interest recalculated accordingly. These loans are the most sensitive to rising interest rates, because their rates reset every month. While option ARMs are big at WaMu and the others, they're Golden West's No. 1 loan product by far.
But Golden West's risk management is among the best in the industry. Its annual default rate has been lower than that of its peers for years. Golden West maintains a higher-than-average percentage of assets in cash to cover losses. And the Sandlers don't lend to the riskiest borrowers with spotty credit histories.
Golden West's conservative strategy will be put to the test if housing tanks. For now, though, it looks like history is on the Sandlers' side.
Later that year Wachovia bought Golden West. Here's another article, this time wall Street Journal, April 2008 "Wachovia and Golden West: A Good Idea at the Time":
In May 2006, Wachovia jumped into a $25.5 billion purchase of Golden West. Investors reacted by sending Wachovia’s shares sailing downward until the price of the deal had fallen by $1 billion on the day it was announced. Investors were worried about future earnings and Wachovia’s history of awkward acquisitions. Wachovia management remained chipper. “We feel like we are merging with a crown jewel,” Wahchovia CEO Ken Thompson said then. “This is a transformative deal for us.”
Unfortunately Golden West did help transform Wachovia– right into one of the mortgage-lending zombies currently menacing the financial-services landscape.
Wachovia ousted its CEO since then, and now there are rumors that they might be thinking about a merger.