Penny Pritzker: Obama's Payoff to His Masters

I have written in the past about Class Traitors, especially those in the Bush Administration. Luminaries like Condoleeza Rice, Alberto Gonazalez, Colin Powell and John Yoo accepted positions in an infamous administration and, because of their origins among the “people,” provided cover for the mandarin class Bush represented. I also pointed out that this is a common practice, bearing many similarities to what slave masters did in the ante-bellum South when they promoted some of their slaves to work in the massa’s house. Having a slave impose order and punishment on the field slaves made the necessary control go down better. The same operates in government. Having Colin Powell or Condoleeza Rice justify the invasion of Iraq made the operation less susceptible to the accusation that it was a ‘white man’s war of exploitation.’

Now, in light of his payoff nomination of Penny Pritzker to be Secretary of Commerce, we are beginning to see that Barack Obama has been another example of this practice. Far from being a representative of the exploited classes—a champion of workers and the poor and the millions who lost their homes and much else in the economic collapse caused by Wall Street banksters—Obama has revealed that he has really been representing the wealthy, exploitative classes all along. This is why not a single banker has been slapped with a penalty for the fraud committed in the financial collapse. This is why virtually every initiative of Obama’s, including his heralded health care reform, has been designed to enrich corporations and the wealthy, rather than help the poor or middle classes as advertised.

In order to understand this, we have to know who Penny Pritzker is, and how she got to be one of the wealthiest women, or men, in America (worth $1.8 billion). According to muckraking journalist Greg Palast, Pritzker met Obama when Barack was a state legislator from Chicago’s South Side, with little or no power. But she saw a fitting candidate for higher office, and promoted him to her Lake Shore friends. They apparently liked him too, and before long, Obama was a U.S. Senator, and then a presidential candidate, with Penny Pritzker as his finance chair. She raised nearly a billion dollars for the “candidate of the people,” along the way introducing him to Robert Rubin, CEO of Citibank and former Secretary of the Treasury under President Clinton, who in turn “opened the doors of Wall Street” to the candidate. In return, of course, Obama was persuaded to nominate Rubin’s protégés, Larry Summers and Tim Geithner to the top economic posts in his administration. (See Greg Palast, Billionaires and Ballot Bandits, Seven Stories Press: 2012.)

Obama also had plans to nominate his friend Penny as Commerce Secretary in 2008, unfazed by her role in the original sub-prime scandal at her Superior Bank of Chicago. But the firestorm of opposition this raised—with the sub-prime fiasco of 2007 still fresh in everyone’s minds—persuaded him to settle on another Commerce Secretary. That Superior Bank scandal, though, was a doozy. According to Dennis Bernstein, host of KPFA’s Flashpoints (in a May 3 piece on Consortiumnews.org, originally written Feb. 28, 2008), it was Penny Pritzker, along with associates at Merrill Lynch (to sell securitized bonds based on subprime loans) who virtually invented the sub-prime scams. First, she and her family—billionaire heirs of the Hyatt chain of hotels and nursing homes—in 1988 bought the failed Lyons Savings Bank for the bargain-basement price of $42.5 million. Aided by $645 million in tax credits from the government, these richest of the rich only had to come up with $1 million in cash, even getting their deposits insured by FSLIC. Then, under Penny’s leadership, Superior Bank concentrated its dealings on sub-prime lending, mainly on home mortgages, acquiring Alliance Funding as a wholesale mortgage business as well. According to Bert Ely, the bank then engaged in all kinds of shady practices, paying “its owners huge dividends and providing them favorable loans and other financial deals deemed illegal by federal investigators.” Their borrowers, by contrast, mostly low-income and minority buyers, were lured in and exploited through “predatory lending techniques, including exorbitant fees, inadequate disclosure and high interest rates.” By 2001, Superior Bank had collapsed, one of the largest failures of its kind ever, and a failure “directly attributable to the Bank’s Board of Directors and executives ignoring sound management principles,” according to FDIC Inspector General Gaston Gianni Jr. in his 2002 report. Penny Pritzker, as owner and board chair, was actually named in a RICO (Racketeer Influenced and Corrupt Organizations Act) class action suit brought for 1,400 depositors who had lost over $50 million in savings. She was also fined $460 million for the predatory, racist practices of her bank.

This is the woman Barack Obama has just named to be Commerce Secretary.

Nor does her lurid past end there. While she was on the board of the Hyatt Corporation, she was regularly attacked by the AFL-CIO for violations in the areas of worker safety, discouraging union membership, and laying off regular workers to replace them with cheaper employees. This would seem to make her an inveterate enemy of unions—including the unions that were assiduously courted to help elect Barack Obama. The teachers’ unions have also taken her to task for favoring the closing of Chicago public schools and promoting charter schools instead, as well as for using the influence to get taxes on her family mansion in the Lincoln Park Area slashed, tax money that funds public schools. When she resigned from the Chicago Board of Education after hearing of her Commerce announcement, the head of the Chicago’s Teachers Union said, “good riddance.”  

President Obama and his team have apparently concluded that Americans have forgotten about the sub-prime disaster of 2007 and that it is now safe to pay off his moneyed master, Penny Pritzker. No doubt the sub-prime queen has let him know, in no uncertain terms, that she expects this as part of the bargain they made to put him in the White House. It is always thus. The Massa doesn’t promote the slave to a position of power without getting his/her due, with interest. All the signs point to a quick confirmation, since the Republicans appear to be delighted with the prospect that one of their own will be running Commerce. If retired banking consultant and researcher Tim Anderson has his way, though, the confirmation may not be a slam dunk. As he noted in a recent CBS interview,

“What has not been focused on until now is what was Penny's role in the subprime mortgage meltdown. It was the Pritzkers who got investment-grade ratings on subprime debt. It was the Pritzkers who were into subprime lending long before Wells Fargo, Countrywide and Washington Mutual. They were in the forefront of the subprime fiasco, but they have never been held accountable.”

Wouldn’t it be something if someone—someone prominent and probably gloating over her apparent escape from justice and imminent rise to unprecedented power and renown—were finally held accountable?

Whether or not such an unlikely turnabout comes to pass, one thing is certain: Barack Obama has lost all the credibility he might still, in some circles, retain. His attempt at a payoff has made perfectly obvious who his real masters have always been. He has also made absolutely clear that there no longer exists a political party or a politician in these United States who hasn’t long been bought and paid for, and placed on a very short, and very unforgiving leash. 

Lawrence DiStasi