Chicago Sun-Times
The scoop from Washington

Obama's billionaire finance chair Penny Pritzker's failed bank lost money for 1,400 customers.

| 14 Comments

BY ABDON M. PALLASCH Political Reporter/apallasch@suntimes.com
White House hopeful Barack Obama talks a lot on the campaign trail about how failing banks have used subprime loans to victimize customers.

"Part of the reason we got a current mortgage crisis has to do with the fact that people got suckered in to loans that they could not pay," he told a crowd in Reading, Pa., last week. "There were a lot of predatory loans that were given out, a lot of teaser rates. Banks and financial institutions making these loans were making money hand over fist."

At the helm of Superior Bank was Obama's national finance chairwoman, Penny Pritzker, an heiress to the Pritzker fortune.

One of the banks that went under after making a lot of subprime loans -- leaving 1,400 of its customers without part of their savings -- was Chicago's Superior Bank.

At the helm of Superior Bank at least some of the time was Obama's national finance chairwoman, Penny Pritzker, an heiress to the Pritzker fortune.

Obama's campaign notes that Pritzker stepped down as chairwoman of the bank's board in 1994, seven years before it failed. She then went on the board of the bank's holding company.

But a letter obtained by the Chicago Sun-Times shows that until the end, Pritzker appeared to be taking a leadership role in trying to revive the bank with an expanded push into subprime loans.

Pritzker wrote in May 2001 that her family was recapitalizing the bank, and she pledged to "once again restore Superior's leadership position in subprime lending." The bank shut down in July 2001.

Pritzker's attorney Kevin Poorman and Obama's campaign spokesman emphasized that not all "subprime lending" is the "predatory" kind that Obama and White House rival Hillary Clinton rail against. The kind of subprime lending Superior was doing in 2001 was not predatory, Poorman said.

But at least some of the 1,400 victims who are still owed money seven years after the bank failed say Pritzker is the wrong person for Obama to put in charge of the campaign's finances when part of his campaign is about reforming the banking industry.

"They still owe me $113,000," said Fran Sweet, 63, of Downers Grove, who deposited her $480,000 retirement account at Superior a month before it collapsed. "To the Pritzkers, this is nothing. They probably think, 'Why pay her back?' That's nothing. But we're all upset that someone who made these decisions could be in that position."

Judging from the record-breaking job Pritzker has done raising money for Obama's campaign, her fund-raising skills do not appear to be in question, but Sweet said it sends the wrong message.

All three major candidates for president have high advisers embarrassed by banking scandals. Republican candidate John McCain himself got caught up in the Charles Keating savings and loan scandal in the '80s. Hillary Clinton's campaign manager Maggie Williams was paid about $200,000 to sit on the board of Delta Financial, which did subprime lending of the type Clinton and Obama have complained about on the stump. Pritzker's brother J.B. Pritzker, part of the trust that owned Superior, though he had no management role, is a national co-chairman of Clinton's campaign.

The Pritzker family bought the former Lyons Savings and Loan with partner Alan Dworman in 1988. Lyons had failed, and federal regulators asked the Pritzkers to take it over. Crain's Chicago Business reported that the FDIC gave the Pritzkers "cash, tax incentives and promissory notes" worth $645 million to take Lyons.

Critics, including private bank watchdogs Bert Ely of Virginia and Tim Anderson of Chicago, say it was a "sweetheart deal" for the Pritzkers in which they pledged far more money than they put up. The thrift was renamed Superior.

For just $15 million, the Pritzkers could pay back the 1,400 customers still owed money, Ely and Anderson said.

The Pritzkers put up $460 million, which federal regulators said absolved them of any further liability in the collapse.

That's less than the $645 million the Pritzkers got to take the thrift, Ely and Anderson note.

Penny Pritzker posted a statement on Obama's Web site saying she regrets Superior's failure but noted it achieved high ratings from regulators when she was chairwoman from 1991-94.

"Superior's failure was complex," she wrote. "In short, the bank failed in 2001 because regulators concluded that the valuation of certain assets in Superior's financial statements, which had been audited by Ernst & Young for many years and previously approved by regulators, was overstated and as a result the bank was not capitalized sufficiently.

"My family voluntarily agreed to pay the FDIC $460 M[illion] to help defray costs incurred by the government and other losses in connection with the bank's closure. ... I am proud of how my family responded to this situation."

14 Comments

Superior bank closed over a decade ago during Clinton and had nothing to do with subprome lending and the current crisis. I know, it was my bank. It was bought by Corus. The people that lost money were traders who had more money in the bank than the FDIC insured - apparently they didn't get the part that you're only insured up to $100,000. So how was that the Pritzger's fault?

What are you talking about?

You people are REALLY desperate if this is the best you can do to discredit the man.

Lynn, learn how to spell.

Like I said Obama a product of the Illinois/Chicago political arena. Some are in jail, some are on trial and others just waiting for the fed's to catch up with them!

Jane--ever been a journalist? Ever balanced a laptop in your, well, LAP? (Lynn--you put one too many o's in the headline word losing--that apparently is the nitpick rude remark).
As for the other rude remark--no attempt to discredit--just a fact.
Pritzger is related to his campaign or running part of it--right?
Obama sat back and let John Edwards get run outta town on a rail for having some connection to a subprime bank--right?
It's a campaign.
There's gonna be news media coverage.
People other than you are going to get to vote.
And voice their opinions.
These opinions may be different than your own.

YOU'VE BEEN HANGING OUT WITH HILLARY TOO MUCH!
OBAMA FOR PRESIDENT, BEFORE GAS IS 6 BUCK A GALLON!
OBAMA FOR PRESIDENT, BEFORE MCCAIN GETS A CHANCE AT THE JOB!
OBAMA FOR PRESIDENT, BEFORE WE'RE ALL EATING SOUP!
OBAMA FOR PRESIDENT, BEFORE EVERYONE IS ON FOODSTAMPS!
OBAMA FOR PRESIDENT, BEFORE ALL JOBS ARE IN INDIA!

Obama for president, but only if he selects Rev. Wright for VP and Ayers for Secretary of Defense.

The Obama advisor who alarms me the most is Brzezinski.
After reading a report of his interview, I saw a tape some time later of Brzezinski giving the same information as in the interview posted below. This time, I saw him laugh after he said the part about "no regrets". I think with our help that country was handed over to the Taliban. There have been very few reports concerning the deaths or cost of the most recent invasion of Afghanistan.


Brzezinski: Regret what? That secret operation was an excellent idea.
It had the effect of drawing the Russians into the Afghan trap and
you want me to regret it? The day that the Soviets officially
crossed the border, I wrote to President Carter, in substance: We
now have the opportunity of giving to the USSR its Vietnam war.
Indeed, for almost 10 years, Moscow had to carry on a war
unsupportable by the government, a conflict that brought about
the demoralization and finally the breakup of the Soviet empire.

Question: And neither do you regret having supported the Islamic
fundamentalists, having given arms and advice to future
terrorists?

Brzezinski: What is most important to the history of the world? The
Taliban or the collapse of the Soviet empire? Some stirred-up
Moslems or the liberation of Central Europe and the end of the
cold war?**

America has lost its moral compass. We are living in a day when the guy who wants to UNITE the country is being scrutinized and the one who dumped his wife for a rich trophy and the one who is staining blue dresses is being uplifted. We have lost our way, and that is why we are in trouble today. McSame doesnt care about people's homes. Liary is lying about dogging bullets while our troops are out getting shot with REAL bullets. And she wants to annihilate Iran. Media attacking the preachers now. Shameful.

"My family voluntarily agreed to pay the FDIC $460 M[illion] to help defray costs incurred by the government and other losses in connection with the bank's closure. ... I am proud of how my family responded to this situation."

WHAT DO YOU WANT...BLOOD!!! They responded with integrity.

Although, it was during the Clinton administration that the bank failed, it was the Clinton administration that expanded on the Carter policy of forcing banks into lending to people who have no ability to repay such a loan.

Pritzker is good at what all liberals are good at doing: Using other people's money. As a matter of fact, she had absolutely nothing to do with her wealth, which she inherited.

You morons who voted for change are going to the first ones screaming when the Obama policies start reaching for YOUR wallet. First up to start screaming: The UAW workers. Bye-bye, idiots. You have killed the golden goose.

Now if only Summers will politely go away. Here's one good reason why.

Harvard alum Iris Mack, MBA/PhD requested a meeting with Larry Summers to express her concerns about how her Harvard Management Company (HMC) boss Jeff Larson used derivatives to manage an HMC portfolio. Larson eventually left HMC to start Sowood hedge fund with hundreds of millions of dollars of Harvard alums' donations. Sowood was one of the first hedge funds to blow up during the subprime mortgage derivatives crisis.

Dr. Mack communicated with Summers' office regarding such derviatives trades. Perhaps, she could have saved Harvard alums hundreds of millions of dollars if Summers had bothered to continue to hear her out before forcing her resignation. There is a wealth of information describing this derivatives whistleblowing case: correspondence between Dr. Mack and Summer's office (emails, faxes, snail mail, phone records, etc.); legal documents; reports from FBI and DOJ interviews, etc.

Given all this, you have to wonder whether Summers was either too
(a) corrupt and wanted to coverup up something(s) at HMC.
(b) arrogant to think that Dr. Mack had anything of value to tell him about mathematical finance and derivatives. Please recall Summers' comments about women and math. Also, please note that Dr. Mack has a doctorate in Applied Mathematics from Harvard and a Sloan Fellows MBA from London Business School.
(c) incompetent to understand what Dr. Mack was trying to warn him about regarding derivatives trades in HMC portfolios.

Did Summers try to silence Dr. Mack the way he, Rubin and Greenspan tried to silence Attorney Brooksley Born of the CFTC? Who knows what goes on in Summers' head? Nevertheless, he seems like a dreadful choice for our nation's next Treasury Secretary.

People are always aiming for the top and want to get there by pulling others down. The Pritzkers know how to make money and thats upsets people. shame

So now the UAW and the big three want a "bailout"! How nice. The golden goose has finally died and now bankruptcy is around the corner. I'm saddened by all this. Now for the UAW... welcome to my world. Maybe now you can't afford to move to Florida and retire. Maybe now you'll have to stay where you were born and ... well, I'm smiling about all this. Cold hearted? Yep, you betcha. The UAW strongarmed till they have driven the automakers into a tailspin and now the golden parachute won't open. Enjoy.

To April 28, 2008 Jane: Are you seeing the world differently now? Have you grown up yet?
You are both ignorant and uninformed on the cause of the Superior Bank failure. You should have read the newspapers on this issue, if as you say, it was your bank. The newspapers were quite clear on the cause of the failure. Superior Bank, headed by Penny Pritzker, failed because of subprime mortgage and auto loans and their securitization. Pritzker was in forefront of the scam and now President Obama has named Penny Pritzker as one of his economic advisors. It appears he's looking for help in scaming the American taxpayer. She's good at that. The people who lost money in the Superior Bank bank robbery aren’t wealthy traders (as you stated) or the wealthy Bernie Madoff investors living a life of excess. They are everyday Americans who spent their lives living within their means and saving for the future in an effort to avoid asking for a handout in later years. They are the responsible people and not of the slacker bailout culture. I'm one of the victims of the Superior Bank robbery. Maybe Jane doesn't mind being taken for a ride but I sure as heck do and I believe most Americans agree with me.


March 2, 2009
I believe Mr. Obama has the right person to help us get out of THE ECONOMY TAIL SPIN - with Ms. Pritzker - She has first hand knowledge of our banking problems.
OWNED SUPERIOR BANK - BANKRUPTED in 2001 - THE LARGEST EVER - QUEEN OF THE SUB PRIME LENDING - ONE OF THE BIGGEST BANK BAIL OUTS EVER. She helping us in keeping that DREAM ALIVE - for those 1405 depositors that lost alot of their life saving - this way you have away to keep them working and they might have a chance to bail out another billionaire family. I have an idea for the stimulus package, ask Ms. Pritzker to pay back the federal government, the almost one billion dollars it cost for this bail out, then she can pay back the large of their minorities who homes were forclosed on, then 1405 depositors that lost alot of their life savings, and the rest can go into the stimulus package. Ms. Pritzker has the financial resources to give 30 million to a Chicago University, because she can, than pay the balance of the 450 million owned to the FDIC, but why when you don't have to pay tax on that money.

What a load of bilge. A bunch of high school sophomores. Sophomoric in the extreme. Unlike any other "american" in US history, you mopes have SEEN the worst unelected president in history. Barrak Obama is not only the best choice for the office, but of either or ANY party. Even JFK got caught with his member in the wringer. But he was also looking to SPLINTER the CIA, you know, where real american foreign and domestic policy is composed and carried out. Further, he planned to end the Vietnam war, and had already brought out a thousand troops. That made a load of "penny pritzgers" or however you spell this name REAL mad. So, they killed him. Lee oswald, MY ASS!! Now once again in my lifetime a man of this mettle appears again!! This is the type of Man the current ELECTED BY A REAL DAMNED BIG LANDSLIDE, the current POTUS is. Jezus krist, the american people are beyond the shadow of a doubt the most ignorant bastards on earth, bar none.

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Lynn Sweet

Lynn Sweet is a columnist and the Washington Bureau Chief for the Chicago Sun-Times.

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This page contains a single entry by Lynn Sweet published on April 28, 2008 12:39 PM.

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