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3 Troubling Things To Know About Billionaire Penny Pritzker - In These Times Skip to content In These Times menu Popular Recent Politics Labor Opinion Israel & Palestine Investigations Rural America Magazine Podcasts Subscribe Donate © 2023 by the Institute for Public Affairs (EIN: 94-2889692) About Subscribe Donate search close No results «» Politics Labor Investigations Opinion Israel & Palestine Feature 3 Troubling Things To Know About Billionaire Penny Pritzker Obama’s Commerce Secretary choice raises serious questions. David Moberg May 3, 2013 On May 2, 2013, in the White House Rose Garden, U.S. President Barack Obama announces his nominee for Secretary of Commerce, Hyatt hotel heir Penny Pritzker. (SAUL LOEB/AFP/Getty Images) facebook Share twitter Tweet link_1 Copy Link email Email Print Despite her business-friendly history, billionaire heir Penny Pritzker, President Obama’s nominee for Secretary of Commerce, will likely face standard Republican flak in her Senate confirmation hearings. 'Penny Pritzker has still not answered for her and her family’s role in the subprime mortgage meltdown of the world-wide economy,' says bank-advisor-turned-banking-watchdog Tim Anderson. But progressive Democrats are the ones with real reasons to be upset with her record and that of her family, which is among the wealthiest in America. Here are just a few: 1) Union-busting. Pritzker’s family businesses have often engaged in anti-union practices. She is a director of the Hyatt Hotels, which fired and then replaced long-time room cleaners in its Boston hotels with non-union subcontracted workers. Hyatt has refused to settle several contract disputes with UNITE HERE, some lasting nearly four years, on terms similar to those accepted by other big hoteliers. 2) Conflicts of interest. The family’s $20 billion empire was built on a diverse base of businesses, including Hyatt, Marmon (an industrial conglomerate), the TransUnion credit rating agency, and many others in industries such as container leasing, insurance and travel. The family has long had a reputation for not only accumulating its wealth through elaborate schemes of tax evasion, including offshore accounts, but also for using its political clout to win favored treatment. For example, community and teacher union critics berated Pritzker, who recently resigned from the Chicago Board of Education, for supporting the closing of dozens of public schools because of financial pressures. At the same time, the highly profitable Hyatt was receiving financial assistance from a Tax Increment Finance fund (a pool of money intended to support blighted neighborhoods in the city) whose assets effectively had been diverted from support of the schools. Pritzker also has drawn fire for her leading role in promoting privately operated charter schools, including networks of non-profits to which she has contributed. While some Pritzkers support Republicans, others, like Penny, are active patrons of corporate-oriented Democrats. Penny Pritzker, who knew Obama before he ran for president, served as financial chair of his first campaign and is credited with bringing in millions of dollars in donations. Many observers see her appointment to the relatively weak — if symbolically still important — commerce post as typical campaign spoils for big contributors. But if she is approved, it will burnish her reputation and increase her potential influence. The Pritzkers, who have contributed large sums to education, medicine, architecture and the arts in their hometown of Chicago and elsewhere, gain protection from the fallout of their questionable business practices through their public image as philanthropists. 3) Shady business dealings. The Pritzkers have a long history of business malfeasance at the expense of people of modest means. In one notable case, Congress passed legislation in 2003 to address issues raised by widespread charges that the Pritzker’s credit rating agency, TransUnion, had made serious flaws in its credit reports on individuals — and then failed to correct them upon discovery. But perhaps the most infamous and pernicious Pritzker abuse of power was the Superior Bank scandal, a predatory subprime mortgage securitization racket that led to the failure of Superior Bank in 2001 and prefigured the 2008 crash. Penny Pritzker played a leading, decision-making role in the lead-up to the failure, which ultimately lost 1,400 depositors an estimated $10 million and cost the Federal Deposit Insurance Corporation approximately half a billion dollars. After the Pritzkers and a family friend took over a failed suburban Chicago bank on very favorable terms in 1988, they began aggressively pursuing high-interest, high-risk subprime loans. They were able to repackage the loans in securities given an investment grade, Anderson says, because they promised to replace any failed mortgage with a good one. But as they pumped out profits for themselves, they eventually failed to live up to their promises, including a pledge to invest more capital. Bert Ely, a prominent bank consultant, says that Superior Bank “was a really sleazy operation” and “pretty gross.” The bank essentially told others in the business to “bring us your crappiest loans you’ve got and we’ll securitize them.” In 2001, the bank collapsed. But thanks to an unusual deal with the FDIC that allowed the Pritzkers to share in a lawsuit against the bank’s auditors, Penny and her family ultimately profited from the failure. They “didn’t own up to their responsibility,” says Ely. “My estimate is that the owners of Superior ended up making big money on the deal after taking into account tax laws, and it’s unconscionable that they made money while pensioners lost money.” When FDIC took over, the Pritzkers continued the operation, giving it an air of legitimacy and setting up the global economy for disaster. Superior’s exploitation of securitization of sub-prime loans, coupled with federal regulators’ lax treatment of the Pritzkers, inspired other lenders, helping to spawn the huge subprime loan market in exotic derivatives that precipitated the 2008 Great Recession. “They plowed the ground,” says former Federal Reserve staffer Walker Todd. “They were the first to show how bankers could make money in the sub-prime business.” “Penny Pritzker has still not answered for her and her family’s role in the subprime mortgage meltdown of the world-wide economy,” says bank-advisor-turned-banking-watchdog Tim Anderson. Why it matters The power of the Commerce Secretary is limited, with many doing little more than promoting American business. But when a Democratic president chooses a business ambassador who has played so loose with the rules, caused so much harm, and shown — despite the philanthropic overlay — so much selfishness and greed in her business practices, it sends the wrong message to an already out-of-control plutocracy. Is this the model for American business that President Obama and the Democrats really want to promote? For a limited time: Donate $20 or more to In These Times and we'll send you a copy of Let This Radicalize You. In this new book, longtime organizers and movement educators Mariame Kaba and Kelly Hayes examine the political lessons of the Covid-19 pandemic and its aftermath, including the convergence of mass protest and mass formations of mutual aid. Let This Radicalize You answers the urgent question: What fuels and sustains activism and organizing when it feels like our worlds are collapsing? We've partnered with the publisher, Haymarket Books, and 100% of your donation will go towards supporting In These Times. Get Your Copy David Moberg, a former senior editor of In These Times, was on staff with the magazine from when it began publishing in 1976 until his passing in July 2022. Before joining In These Times, he completed his work for a Ph.D. in anthropology at the University of Chicago and worked for Newsweek. He received fellowships from the John D. and Catherine T. MacArthur Foundation and the Nation Institute for research on the new global economy. Have thoughts or reactions to this or any other piece that you'd like to share? Send us a note with the Letter to the Editor form. More articles by David Moberg Feature "Revolutionary Suicide": On the Horrors of Jonestown "Dad—I see no way out—I agree with your decision—I fear only that without you the world may not make it to Communism." An excerpt from a letter found on the body of Jim Jones. 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Luis Feliz Leon Sign up for our weekend newsletter A weekly digest of our best coverage Get 10 issues for $19.95 Subscribe to the print magazine. Subscribe Now In These Times Our staff and writers are represented by these unions: facebook twitter “ No political movement can be healthy unless it has its own press to inform it, educate it and orient it. ” —IN THESE TIMES FOUNDER JAMES WEINSTEIN About Who We Are Investigative Institute Past Issues Privacy Policy Support Donate Become a Sustainer Bequests Advertise Subscribe Magazine Subscriptions Gift Subscriptions Customer Service Podcasts Contact Submissions Jobs Internships Reprint Requests Press Inquiries Contact Us As a reader-supported 501(c)3 nonprofit, In These Times does not oppose or endorse candidates for political office. Copyright © 2023 by the Institute for Public Affairs (EIN: 94-2889692)