Democratic presidential contender Barack Obama says he'll crack down on fraudulent sub-prime lenders. If he really means it he can start by firing his campaign finance chair, Penny Pritzker. Before taking over Obama's campaign finances, she headed up the borderline shady and failed Superior Bank. It collapsed in 2002. The bank's sordid story and its abominable role in fueling the sub-prime crisis are well known and documented. It 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. It made thousands of dubious loans to mostly poor, strapped homeowners. A disproportionate number of them were minority.
Obama's home state, Illinois, ranked near the top of thee 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 those lost their homes. When the bank collapsed Pritzker and bank officials skipped away with their profits and reputations intact. Aside from the financial and personal misery sub prime lenders caused the thousands of distressed homeowners, sub-prime lending has been a major cause of the housing crisis in many areas, and has dealt a sledgehammer blow to the economy. Obama has said nothing about Pritzker, Superior Bank, or their dubious practices.
Instead, there was a touching, even teary eyed photo op, moment during one of Obama's Texas campaign swings. There was Obama talking to a group of San Antonio residents and lambasting 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.
The problem with the staged scene in Texas and Obama's words to the residents is that he left a couple of things out. One is Pritzker's name. He's also been mum on what the bank that she once headed up did.
Other than Obama's quip about the greedy sub-prime lender CEO to San Antonio residents, a Google search found no Obama statement on Superior Bank, no detailed statement on the sub-prime crisis, or what he did as Illinois legislator to deal with the crisis helped along by his finance chair's bank. There was a length list of topics on Obama's official campaign website that detailed the candidate's position on everything from the environment to the Iraq war. Yet there's not one sub-topic on housing, or the sub prime crisis on his campaign website.
Obama has not publicly called for a moratorium on lending, or tough civil and criminal penalties for lenders that engage in deceptive lending practices, or called for an interest rate freeze. Former Democratic presidential contender John Edwards and Clinton called for a moratorium, and providing generous aid to strapped homebuyers face with foreclosure. Obama's rescue plan has been roundly criticized as tepid, cautious and not much better than what Bush has called for to deal with the crisis.
Obama blew off questions about Pritzker and the Superior Bank fiasco with the terse (through a spokesperson) quip that he'd crack down on fraudulent lenders. So again, the two ways he can prove that he means business is to dump Pritzker as his finance chair and then retool his campaign pledge to support a full moratorium on sub-prime lending, tighter regulatory oversight over lending practices, and debt relief for the thousands of homeowners that have already gotten the boot from their homes. Obama boosters will try to muddy the water by fingering Pritzker's brother, Jay Robert Pritzker, who heads up a campaign committee for Hillary Clinton. That's irrelevant. Jay Robert did not head up Superior Bank when it ran roughshod over homeowners in Illinois and nationally. He does not head up Clinton's campaign finance committee. The campaign committee he started is one of dozens of Clinton campaign committees that operate in many states.
Obama's message is one of hope and especially change. He can prove it by changing his finance chair, and doing it now. And then telling the public what he will do to stop bank's like the one his financial point person headed from bleeding needy and desperate home buyers dry.
Earl Ofari Hutchinson is an author and political analyst. His forthcoming book is The Ethnic Presidency: How Race Decides the Race to the White House (Middle Passage Press, February 2008).