Pritzker Saved Obama Much Embarrasssment By Bowing Out Of Commerce

Billionaire Obama campaign finance chair Penny Pritzker did the smart, maybe the only, thing she could when she quickly scotched talk that she wanted to be Obama's Commerce Department Secretary. Pritzker says she doesn't want the post because she can better help the administration by doing her part to create businesses and jumpstart the economy. That's admirable and probably heart felt. But Pritzker also knows a little something about politics too. If her name had ever gone up to the Hill it would have ignited a firestorm that could have blown back on her boss.

Pritzker and her failed Chicago based Superior Bank were knee deep in the subprime lending mess. The bank engaged in deceptive and faulty lending, questionable accounting practices, and charged hidden fees. It did it with the sleepy-eyed see-no-evil oversight of federal regulators. It made thousands of dubious loans to mostly poor, strapped homebuyers. A disproportionate number of them were minority.

For a time Obama's home state, Illinois, ranked near the top of the states in the percentage of sub-prime mortgages. Nearly 15 percent of home loans were sub-prime according to the Mortgage Bankers Association. But that only tells part of the tale. According to the Woodstock Institute, a Chicago non-profit that studies housing issues, the sub-prime fall-out was far higher in the predominantly black and Latino neighborhoods of South and Southwest Chicago.
The predictable happened when many of the distressed homebuyers lost their homes. When the bank collapsed Pritzker and bank officials skipped away with their profits and reputations intact.

Obama certainly well knew the ruinous impact that subprime lending had on the lives of thousands of homeowners who when rates inevitably jumped could no longer afford keep up their payments. Subprime lenders like Superior Bank were probably the single biggest cause of the financial meltdown; a fact also well known to Team Obama.

In an early campaign rally in San Antonio, Texas Obama slammed the CEO of a sub-prime lender for greedily snatching at a $100 million buy out package while thousands of home borrowers that his company snookered into loans at below market rates faced foreclosure or the threat of foreclosure. Months later at another campaign stop in Redding, Pennsylvania, Obama again blasted the sub prime con artists. He accused them of making money hand over fist off the misery of desperate, distressed homebuyers. This was a huge campaign sale point to the state's blue collar workers in his ultimately successful effort to bag must win Pennsylvania.

This writer and others publicly questioned Obama on how Pritizker could be his top money raiser when he knew that her old bank had wreacked so much financial damage. The Obama campaign responded that Pritzker was not charged or accused of any criminal wrongdoing, and the Pritzker family entered into a voluntary settlement and agreed to pay the government $460 million to defray its losses. Pritzker defenders noted that she had stopped playing any active role in the bank long before it collapsed. That was a stretch.

Seven years after she had allegedly ceased any active role with the bank she wrote a letter saying that her family would recapitalize the bank and restore Superior to a top spot among the leaders in sub prime lending. The only thing apparently that stopped that from happening was the bank's collapse in July 2001.

Obama has lightly called for a moratorium on lending, for tough civil and criminal penalties for lenders that engage in deceptive lending practices, and an interest rate freeze. It would look awfully funny for him to talk about any of these things with Pritzker as one of his administration's top business advisors and as his administration's overseer of the effort to stimulate businesses and banking. A Pritzker nomination would leave him wide open to the charge that he laddled out a plum administration post to a friend and confidant who engaged in questionable, even hurtful business practices.

That's the kind of charge and controversy that Obama doesn't need. Pritzker did him, herself, and probably the thousands of other bilked homeowners who still blame her family bank for their misery, a favor by bowing out of Commerce. That is if indeed she did bow out. Stay tuned.

Earl Ofari Hutchinson is an author and political analyst. His forthcoming book is How Obama Won (Middle Passage Press, January 2009).

Comments

[Bitsko]

Good points. The Superior Bank story would have created a media feeding frenzy. On to the next story!

[LauraD]

I find it funny that it's entirely the fault of these sub-prime lenders and those with "mortgages they can't afford." I find this funny because they were able to afford those mortgages 10 years ago with little to no problems. Are we really so naive to think that the increased cost of EVERYTHING over the past 8 years had nothing to do with people no longer being able to pay their bills?

Strange method of finger pointing we've got going on. Ignore the obvious and look for the obscure. Well, whatever floats your boat.

[Bitsko]

I believe it is a little more complicated than that.

[jazzence]

Wasn't that in 2001? So it wasn't an offset of the current mortgage crisis, just to be clear. But good for her.

[arvay]

Who are these people?

http://en.wikipedia.org/wiki/Pritzker_family

[Bitsko]

Pritzkers, can you spare a dime?

[tbone99]

For true democracy its important that the powers behind the scene have names . Penny Pritzker is one of the puppet masters in this campaign- she galvanized her finance friends into providing a large portion of Obama's warchest.

Just because he's our candidate doesn't mean he is always noble and that everyone who assisted is without an agenda.

[Heru1]

youre right about agendas, what's yours

[Texas4Obama]

The media is getting out of hand with all of their speculation.
Unless Obama or the Obama campaign says they have tapped someone then any rumors should be disregarded.
Pritzer came out only because the media was telling things that were not true, in others words FIBS.
Also, from what I've read, Penny was not responsible for what the bank did... she was thrown into a situation that was created by her uncle.
America needs to grow up and hold people responsible for only their own actions not actions of other people or for associations to other people. We are not living in the days of McCarthyism - at least I hope we are not, and if we are then WE THE PEOPLE need to put a stop to it ASAP!

[Fongenie]

Right.

[truegreen]

I agree. The MSM is behaving like a pack of wolves at the feast.

[jalowe1957]

With so many distressed homebuyers losing their homes to foreclosure, isn't it time for a year of Jublilee, where they could forgave all that subprime mortgage and credit card debt?

If it's good enough for those in Biblical times, why can't they do this today when we need it?

But then, people had a thing for selectively quoting the Bible, particularly the theocons.

[ckfan]

She was never under consideration for the post. She came out with a statement because of rumors. That's all they were - rumors. No truth in these rumors at all.

[MPeter]

She is a good woman; a good person and a loyal friend. I would have liked to see her in the cabinet; I still would like to see her stay close with President Obama. The vetting process for public office and the cannibalism that our politics have become deny us the services of smart, capable people like Penny.

Regardless of what she decides, her name is now etched in History. she did her part in defeating Old Money; She did her part in helping The First African American President. Thanks Penny. You are a great American.

[meede]

I admire your standing up for your friend but -- yes, there is a but. We, as citizens, have been ignored, used, abused, not listened to, etc., etc. for so many years by so many administrations whether red or blue, that got into office on promises that within days started to be broken. At that point, because we trusted in the person we put into office, who then has the power to pick who the cabinet members will be, our voices were silenced. We then had no power to hold anyone accountable.

Therefore, asmuch as your friend may be a good person, you firstly are biased, and I not knowing her and reading this story, have red flags almost jumping out of my monitor. Should Obama have tagged her -- no matter that her family settlled and she was never charged, it still remains the family participation. If the bank had succeeded or had been restructured as she proposed, it would have made no difference. The movement of hope and change he created would have crumbled before he got into office. That's how fragile it is with citizens -- many like ! so close to retirement somehow has to find a job as like so many, retirement funds tanked, home values, jobs, credit - gone but bills come due. Mainstreet does have the luxury to trust what was greed which he stumped on to stump out.

[Heru1]

O ye of little faith