Obama Embraces Plutocrats Again With His Billionaire Commerce Secretary Choice
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President Obama has let the public down once again with his pick for Secretary of Commerce Penny Pritzker, the billionaire businesswoman who led the national 2008 fundraising effort that kept the Obama campaign’s hopes alive and catapulted him to the White House.
Loyalty and trust are prized political values—and clearly Obama trusts Pritzker, whom he has known for two decades. But Obama’s fealty is going to be tested because her record as a businesswoman shares similarities with Mitt Romney’s. Her massive wealth is kept in tax-avoiding offshore accounts. Her family’s best-known business, the Hyatt hotel empire, is known for bitter and ongoing disputes with labor unions. Her resume includes running a bank that pioneered high-interest subprime loans and then failed miserably, leaving uninsured depositors with losses averaging $6,000.
Since 2008, when Pritzker was said to have wanted the Commerce post, she apparently has disentangled her assets from her family’s portfolio. But there is no escaping that her nomination highlights the biggest schism in the Democratic Party: it cannot be a party that embraces both workers and the wealthy without large doses of hypocrisy.
“There is a huge unresolved set of issues in the Democratic Party between people of wealth and people who work,” Andy Stern, the Service Employees International Union ex-president, told the New York Times last July. “Penny is a living example of that issue.”
Not Just An Heiress
Pritzker is the second female CEO Obama has nominated to a cabinet post this term. He picked Sally Jewell, CEO of Recreational Equiment, Inc., for Interior Secretary. But Pritzker’s record in business, politics and philanthropy is much deeper. Her career is that of a person who wanted to be known for more than a family fortune. Yet there is no escaping which side of the economic tracks she hails from.
Pritzker, who turned 54 on the day Obama nominated her, is one of three children of Donald Pritzker, who co-founded Hyatt hotels. She went to private schools in Chicago, earned an economics degree from Harvard University, and then a JD/MBA at Stanford. In the late 1980s, an uncle bought 50 percent of the Illinois-based Superior Bank from the FDIC for $42.5 million and was given $645 million in federal tax credits.
Pritzker was Superior’s chairwoman from 1991-1994, when it pioneered the same kind of high-interest subprime loans that caused the real estate market to crash several years ago. Consumer advocates called Superior’s loans predatory because they were sold to people who could not afford them. But the bank also sold its debt as securities and hid its true financial health from regulators—much like Enron, the Texas energy company that branched out into deriviatives and collapsed at that time.
After the uncle who bought the bank died in 1999, the family asked her to take over the bank. She did and tried to restructure its debt, but the FDIC seized the bank in July 2001. The agency then worked out a settlement with the Pritzker family, where they agreed to pay $460 million over 15 years. That settlement still left account holders a total of $10 million short—an average of $6,000 for uninsured depositors. Federal courts ruled the family could not be sued to recover any more funds.
“This is a story of two Americas with two sets of laws, one for the rich and powerful and another for the rest of us,” Clint Krislov, the depositors’ attorney, told Consortium News in 2008. “My clients will all be dead, before they get back their money, given the [U.S.] Supreme Court’s recent decision to uphold the lower court, which put the predatory owners on the front of the line, if any money is recovered.”