The Obama White House tends to be a place where all common sense is reversed–like driving a car in England. This week, a fresh example of this was created, when the President named Penny Pritzker–part of the dynastic Chicago family of the same name–as his second-term nominee to be the 39th Commerce Secretary of the United States.Quoting from the department’s official website, the Department of Commerce is responsible for “job creation, economic growth, sustainable development and improved standards of living for all Americans by working in partnership with businesses, universities, communities and our nation’s workers. The department touches the daily lives of the American people in many ways, with a wide range of responsibilities in the areas of trade, economic development, technology, entrepreneurship and business development, environmental stewardship, and statistical research and analysis.”
The “about” paragraph ends by citing that the Secretary of Commerce is responsible for a budget of $7.5 Billion, and nearly 47,000 employees worldwide. Big numbers, by any measure.
As the people Ms. Pritzker will be representing, it is OUR responsibility to take a short walk down memory lane, to see how her experience, values and business outlook squares-up with such an important position. God knows, we can’t necessarily count on the US Senate to do the proper due diligence on her, as even so-called conservatives have gone on record to say that President Obama “deserves” his choices for cabinet posts.
The George Washington of Subprime Lending
From 1991 to 1994, Ms. Pritzker was chairman of Hinsdale, Illinois-based Superior Bank, an institution acquired (50% stake) by her uncle, Jay Pritzker, from the FDIC after it had failed. In 1993, the bank is said to have “embarked on a business strategy of significant growth into subprime home mortgages,” according to a report by the US Treasury Department.
Some might say her subprime strategy sewed the seeds of later failure, and by 2000, the bank was in trouble once again. In 2001, the FDIC seized the bank, after a failed recapitalization plan. Depositors received 81% of their uninsured deposits in Superior Bank (accounts with balances over $100,000), paid from a $460 million settlement with regulators. That translated into a depositor loss of $65 million, and an FDIC loss of $700 million.
In a Wall Street Journal article entitled “A Top Obama Fund-Raiser Had Ties to Failed Bank” (July 21, 2008), reporter John Emshwiller cites 64-year old Fran Sweet, a retired Ameritech telephone employee, who deposited $480,000 of retirement funds into Superior bank. Sweet lost big in the post-failure haircut (between $70,000 and $100,000), and was quoted in a March 2013 piece on dailycensored.com as saying “(the Pritzkers) are ‘crooks.’ They don’t care anything about people who spent their whole lives trying to save.”
As the former Superior chairman, Ms. Pritzker, was quoted as saying in 2001, “I am proud of how I and my extended family dealt with (Superior’s closure).”
The subprime strategy undertaken during Ms. Pritzker’s tenure is among the first instances of institutional failure, in what would ultimately become the subprime stain on the US economy in the mid 2000s.
Ms. Pritzker has maintained that Superior “complied with fair lending laws and ethical business practices.
Visit the links below for a deeper-dive on this part of the story.
Green Initiatives = Greenbacks for Connected Politicos
The Pritzker family is thick in the “Green Movement,” where grants and government “investment” stream-back to politicians, in a sort of “recycling” diagram, via environmental lobbyists. The green movement has strong critics, and is said to be “religion for atheists.” Ms. Pritzker’s brother, Anthony, endowed the UCLA School of Law with a $1 million gift to establish the “Tony Pritzker Environmental Law and Policy Briefs.” The stated purpose of the program is to “influence and provide expert analysis on legislation, academic research, corporate actions and the public dialog on urgent and important issues impacting the environment.” The talk around the Thanksgiving table should be especially green this year, and it will have nothing to do with the Brussels sprouts.
Offshore Breezes
In a post-nomination piece entitled “Pritzker Family Baggage: Tax Saving Offshore Trusts” (May 2, 2013), Forbes picked up the scent of the family’s heavy use of offshore trusts. The article quoted Iowa Senator Chuck Grassley as saying “Every nominee’s offshore tax avoidance activities should be examined as part of the nomination process. If the Commerce Committee doesn’t explore these questions with the nominee, I plan to do so, but I hope the committee will give the tax history a serious look.”
Reporter Janet Novak diagramed the flow of these trusts, and how earnings and capital gains flow from Pritzker-controlled entities, to offshore trusts to a so-called “captive bank” owned by the trusts, in the form of debt service (see link below).
Morality Carwash
In the movie “Casino,” Robert De Niro’s character called Las Vegas of the 1970s a “Morality Carwash,” a place where past sins are cleansed. Politics of the 21st century seems to be the new Las Vegas, as well-heeled brokers of campaign cash (Penny Pritzker was Obama’s 2008 fundraising chair), line up to have the salty-spray of business life rinsed from their fenders.
If you were writing the perfect film script, it would be a natural story line to show the headline “Penny Pritzker named Obama National Finance Chair” (Chicago Sun-Times, January 31, 2007), and then, in the next scene, the image at the top, following a “Six Years Later” title card. Sometimes, life imitates art.
Capitalist Union Votes “Nay”
As Capitalists, we don’t have any problem with the sometimes-ugly perry-and-thrust of business. We are not saying “she’s a billionaire, so that disqualifies her.” We NEED strong business leaders in critical positions of our government (though, for a short time, not a lifetime).
BUT, at the same time, we need people who are going to do the right thing by ALL of American business, and not just an insider group of generational oligarchs who get to call plays on US policy directives, with a text message or a whisper directly to the Secretary of Commerce — the chief representative of American business.
It is for this reason, that Capitalist Union votes “NO” on the confirmation of Penny Pritzker as Secretary of Commerce. We encourage you to take five minutes to write your Senators, to voice your disapproval of this choice (link below). It will make a difference!
Links:
Senate Contact List
A Top Obama Fund-Raiser Had Ties to Failed Bank
Wall Street Journal
Breaking the Bank
inthesetimes.com
Obama’s Sub-Prime Conflict
Consortium News
Pritzker Briefs
UCLA School of Law
Pritzker Family Baggage: Tax Saving Offshore Trusts
Forbes
Penny Pritzker: Obama’s Likely Commerce Secretary Choice
Daily Censored
