Editors Note: We at Second City Teachers bring you the second of a three part research interview about the wealth accumulation of Penny Pritzker, and it is really an eye opener. This is the information you do not read everyday in our mainstream media. Penny reminds me of the oligarchs who descended upon Russia in the 90s to gobble up state assets at bargain prices while robbing the people blind. How powerful are the Pritzkers? They own Obama and Hilary Clinton, a future presidential contender. Warren Buffet is in awe of them, and makes money for them. You read this stuff, and you begin to think like a Bolshevik. To understand how the United States works, you need to understand how people like Penny Pritzker operate. Enjoy! - Editor Jim Vail, Second City Teacher
The Privilege of the Pritzkers
by DENNIS BERNSTEIN
DB: Yes, they do. Now going back to the first Obama campaign, if the Clintons know they have a subprime bandit running their key opponent’s finances, why didn’t they go after Penny and her subprime operations? But the Clintons had a Pritzker too.
TA: Penny’s brother was co-chairman for Hilary’s campaign. I used to joke that it didn’t matter who won. If Hillary won, her brother would take her to the inaugural ball. If Barack Obama won, as he did, Hilary could take her brother to the inaugural ball. The Pritzkers bought both horses in a two-horse race. It was a no brainer. Society was fed up with George Bush, Dick Cheney, etc. Whoever won the democratic nomination was going to be the next president. The Pritzkers hedged their bet and bet on both horses in a two-horse race. They had one, and her brother had the other.
DB: How powerful are the Pritzkers in their hometown of Chicago?
TA: The Pritzkers have the Pritzker Foundation. The Pritzkers are large contributors to the museum, symphony, opera; anything that they can get their brass plaque above everyone else. They are golden in Chicago. They give away the Pritzker architect award, which is considered the Pulitzer of architecture. They have many others – as they curry favor with everybody. They invest in their own good name. They are very smart and savvy, disregarding what is good for society.
DB: Whatever the banks are doing now, they were doing 20 years ago. She was out of the subprime business by 2001 or 2003 and the FBI decided not to investigate anybody until 2004. How did that happen?
TA: That’s the privilege of the Pritzkers. They are immune to investigation. When the Pritzkers signed off on the deal on the Superior Bank with the FDIC to pay only some of the money, part of the agreement was that the FDIC, for this agreement, which is public record, would not cooperate with any other government agency without the Pritzkers. So the Justice Department couldn’t investigate the Pritzkers without the FDIC’s blessing, and the FDIC agreed they wouldn’t do it. What the Pritzkers did, and they negotiated beautifully, is they negotiated immunity from prosecution for all subprime crimes going back to 2004. In 2002, when the FDIC took over Superior Bank, they ran it for ten months under their management, using all the employees of Superior Bank and their mortgage originators. As the Wall Street Journal reported, for ten months the FDIC was the largest subprime lender in the country. They were taking the mortgages they were making, securitiizing and selling them off.
DB: Hence the Wall Street connection.
TA: Yes. The FDIC ended up working for the Pritzkers.
DB: Let’s talk about their predatory operations. There were many leads, examples, stories about what the Pritzker operation was doing to trap poor people, targeting specifically brown and black people for these predatory loans. They had a whole operation.
TA: I interviewed the only mortgage originator who went to jail out of the Superior Bank operation. The only reason he went to jail is that he pled guilty for the Pritzker’s signing the agreement with the FDIC. All his other cohorts who were going to be indicted were never indicted. I talked to the FBI, and they were ready to indict 14 people in this area. But the one guy, Jason Dune pled guilty and got it behind him. He explained to me that what you do is target a small couple and rip them off by moving the Pritzger subprime loans into their lives.
The subprime people would say they are just giving lower income people and middle America people a chance at the American dream. But these were not fresh mortgages; they were all refinanced mortgages. Superior was in the refinance business. If you had the American dream, the Pritzkers and Superior would push you into an American nightmare. That’s what they did across the country with lending offices under Alliance Funding. You can’t appreciate how large and profitable their operation was. They kept taking all the profits out in distribution dividends for the Pritzkers and then the OTS said, “You are taking so much money out, you are under capitalized.” But rather than give the money back, they said, ”OK, you take over the operation. The subprime business is over and we want out.” So they got out. But they got out without having to take any responsibility, and that is the real shame that has never been dealt with.
DB: So poor Jason Dune told the truth and went to jail for it. Penny stole zillions and she’s going to be the next Secretary of Commerce.
TA: That’s up to our Senate. Does our Senate, in a non-partisan manner, want to stand up and ask Penny a few questions, such as “What was your role in getting subprime mortgage bonds investment grade?” That’s how every pension fund, such as CalPers, the teachers pension fund in California that bought mortgage-backed securities because they were investment grade, lost money. How did they become investment grade? The Pritzker’s genius was that if there is a bond with a thousand mortgages in it, and they’re all subprime, it’s a junk bond by definition. The Pritzkers convinced the rating agencies that if any mortgage goes bad they would take it out of the bond portfolio and put a fresh mortgage in. So the raters said, “if that’s collateral substitution, the bond can’t default.” They forgot to ask the one question: what if you can’t make mortgages anymore? They couldn’t when they were taken over. That was the start of the collapse of subprime mortgages. There never should have been investment grade. But once it became investment grade, Merrill Lynch was doing it with the Pritzkers, then Countrywide, Wells Fargo and Washington Mutual had to do it because every major pension fund wanted these investment grade subprime mortgages. They paid a very high yield and knew they were quality because the rating agency said investment grade triple A. They never were triple A. We all have hindsight. The Pritzkers created the investment grade for the entire subprime mortgage industry. Once that collapsed, the worldwide economy collapsed. And this is the person they want to put as Secretary of Commerce.
DB: The Pritzkers were doing this beginning in the 40s. How could the first Obama campaign, when Obama was a newcomer and Penny was the chair of the finance committee, out fund raise by two to three times what the well-connected Clintons raised?
TA: The Wall Street Journal wrote a cover story on the genius of what Penny set up. Besides being able to call all her friends to give money, they set up a system through public relations where people on the street pledged on their credit card to give $10 a month to the Obama campaign. The credit card was debited for a year and everybody wanted to be a piece of it. To see the momentum, look at the tapes of inauguration, the night in Chicago when he won the election. There was enormous euphoria in the country. There was euphoria because people were fed up with Bush. Nothing has made Bush look better than the last four years with Obama. Penny, four years later, as Secretary of Commerce, is not going to investigate herself. The circle closes. It’s up to the various editors of major newspapers, television and radio stations, to do their research. It’s all out there and easy to do. I was able to find information, find the documentation, reports. They need to do it and contact the various senators on the committee and make them ask Penny the questions. If Penny can answer the Senate’s questions, the Senate which represents us, then let them vote her in.
DB: Penny never relents – she’s always moving forward. There was an excellent picture of Penny as the President of the Pritzker Realty Group which owns the former navy base with David Pace, who is managing her development in Orlando with Orlando mayor Glenda Hood. She owns a lot of politicians. What has she been up to?
TA: Any politician who is for sale knows how to call Penny and ask for money. What the Pritzkers did in ’01 when the navy decided there would be one recruiting depot in Great Lakes, Chicago-land, the Orlando and San Diego naval bases for recruits were closed. The Pritzkers were able to acquire 1,093 acres for $6900, under $7,000 an acre. That was the price they were paying for it. They were supposed to include some low and moderate-income housing, but after the deal closed, they realized, what a waste, let’s just build million dollar condos and houses. They were also able to sell back to the government open-space land and never paid a penny. They used taxpayer money to buy it by selling back land they couldn’t use. They sold wetlands and swampland as parks. They either got tax credits, which for the Pritzkers was the same as money, or they actually got cash for selling it back. They got financed to buy it through the state and the city of Orlando, which is when the politicians came in. It was a 19 million deal, which became 130 million and they never even used their own money. You cannot duplicate the deals they pull off. They are more than wealth – they are privileged. They can do whatever they want and not be held accountable and the people suffer. There were 1400 uninsured depositors of Superior Bank – the hubris of Penny. It would have been peanuts to be sure that Fran Sweet, and the other known excess depositors of over $100,000 were paid back. They lost their money because they were told the Pritzkers would never let it fail. They put their money in there, though they were nervous putting $100,000 in. It would have been so easy for Penny to pay them off. About a year ago, to get rid of this last debt to the FDIC, the Pritzkers got a discount for paying off their debt to the FDIC early. So Fran Sweet and 1400 other uninsured depositors will never get all their money back. The Pritzkers do not pay their bills. They like to say they pay their debt, but they don’t. This is just contempt – absolute contempt for society.