Thursday, May 16, 2013

The Privilege of the Pritzkers


Part 1

President Barrack Obama has nominated his long time friend and top fundraiser, Chicago-based Multibillionaire, Penny Pritzker, to be the next Secretary of Commerce. According to the Chicago Tribune, “Pritzker’s nomination could prove controversial. She is on the board of Hyatt Hotels Corp., which was founded by her family and has had rocky relations with labor unions, and… She could also face scrutiny over the collapse of Superior Bank, which was co-owned by her family. The bank, based in Hinsdale, Ill., was involved in subprime mortgage lending, and its failure in 2001 stirred charges of fraud and mismanagement.”

Penny Pritzker, says Chicago-Based independent banking investigator Tim Andersen, played fast and loose with the American Dream. Anderson, who has been investigating for many years Pritzker’s pioneering sub-prime operations, says Superior Bank in Chicago, specifically targeted poor and working class people of color across the country. He asserts that her extreme wealth and privilege has not only made her virtually untouchable by law enforcement, but now her appointment to Sec of Commerce, will allow her to cleanse her  sub-prime banking record by becoming the Secretary of Commerce.

D.B  Let’s start with some deep background on Penny Pritzker and the family holdings…

TA:  There are 11 senior Pritzkers, the descendants of A. M Pritzker, who is  the 11th wealthiest person after Forbes.  But they are different as far as their wealth goes.  Before they broke up the family dynasty because of a suit between two of the junior siblings, they had about 15 billion dollars.  Bloomberg thought it was more like 38 billion because so many of the assets are major companies that are privately owned, it’s hard to evaluate that.

DB:  $38 billion, with a B.

TA:  $38 billion.  One publication listed eight casinos, another listed 13, with each license worth a half a million dollars. There is another $5-7 billion in casinos.  When you own 13 casinos for 5-7 billion, you are a player in the casino business.  That’s just the hotels and casinos.  There are many other companies they own such as the second largest chewing tobacco company, which they sold for 3.5 billion dollars.  They actually owned the second and third largest chewing tobacco company, but have since off-loaded those for billions of dollars.  Many of their assets are not what society considers clean assets, but hey don’t care.  As far as money goes, they want it.  When it comes to casinos or chewing tobacco companies, they don’t care.  Their wealth is almost incalculable, because according to Forbes magazine, they are the only family in America to have off shore tax-free trusts because they were grandfathered in. Their off shore trust can ship money back to their family tax-free.  It was grandfathered in because their grandfather got it through Congress – he was smart to see the future and got it done.  Congress closed the loophole and grandfathered him in.  Forbes magazine wrote about the Pritzker’s off shore trust, they emphasized that there are over 1000 separate trusts.  Many families have two or three different savings accounts to keep track of what money belongs to who, but when you have over 1000 different trusts to handle the family estate it’s very hard to comprehend how much wealth there is and how many businesses they control.  A few years ago, Penny sold TransUnion, the largest credit reporting agency in America, but there’s a question about whether she sold it to herself by selling it to various hedge funds which her family has a large interest in.  Until she sold it, you could say that Penny Pritzker had more files on every citizen in America than the CIA and FBI combined, because everybody has a credit score and credit report.  Penny Pritzker had the credit scores and report on every single citizen in America.

DB:  That’s amazing because before she had TransUnion, she had Superior Bank, through which she destroyed the credit of tens of thousands, hundreds of thousands.  You might say she helped destroy the credit of the United States of America.

TA:  She had TransUnion while she had Superior Bank, so she controlled the credit scores of everybody who was getting a subprime loan.  You pay a higher interest on your subprime loan based on your credit score.  Whether or not it was ever brokered between the credit bureau and the bank, we don’t know, but we know the same people control both entities.

DB:  What happened with Superior Bank when Barak Obama was an assemblyman in her district?

TA:  Superior Bank was acquired back in 1989 as part of the original savings and loan giveaway by M, D and E Wall.   As I wrote a in a paper for an economic conference in Denver, Superior Bank was sold to the Pritzkers for 42.5 million dollars.  They changed the name from Lion Savings and Loan to Superior Bank after they acquired it.  Lion Savings and Loan was sold to the Pritzkers just to put up money for the capital.  But as government reports show, they only put up a million dollars cash and pledged their assets as the difference, the capital.  That’s not supposed to be done, but they are privileged people so they get privileged deals. After they acquired this for $1 million they also got $640 million in tax credits.

DB:  So they paid a million bucks and got $640 million in tax credits.

TA:  The tax credits were designed so they could use it in any entity they wanted.  They didn’t have to use it on what they bought.  It could be sold on the open market for value, the credits could be used to file back taxes or warehouse them for future taxes.  So for a million dollars, they got 640 million dollars for agreeing to take over Superior Bank, which they then looted for years then gave it back to the government with an enormous loss to the uninsured depositors and the whole subprime industry.

DB:  And the US taxpayers.

TA:  Oh yes. Taxpayers have lost very, very dearly.  In 2007 and 2008, real estate dropped in value because of the subprime bubble bursting.  Penny Pritzker, who ran Superior Bank, is going to claim she was just a silent investor and chairman.  I gave the Chicago Sun Times a letter on Superior Bank letterhead that they ran, dated May 31, 2001.  Addressed to the management and employees of Superior Bank, it said “with great pleasure…I am able to announce an agreement has been reached with the Office of Supervision for a $351 million plan to recapitalize Superior Bank.  They reached the agreement, but they never paid it.

DB:  So the Pritzkers never paid the $351 million?

TA:  No.  They reached the agreement so they could stay open.  Then three months later they said that’s a bad deal – let’s just reneg on it.   So they told the FDIC, “Here are the keys, you take it.”  During that period of time, this letter, signed by Penny Pritzker, told her people – we are going to regain our prominence in the subprime industry.  She was so proud of her prominence in the subprime industry.  At that time, Wells Fargo, Countrywide and Washington Mutual hadn’t tooled up in the subprime lending as they did later on.  One reason is they didn’t have a staff to do it.  The FDIC closed down Superior Bank with its thousands and thousands and thousands of employees who made originated mortgages through their origination department.  After they were laid off by the close of Superior Bank, they couldn’t work anywhere so they worked for Wells Fargo Countrywide.  The whole tool up of Washington Mutual, Countywide and TransUnion are old Superior workers who were out of a job and knew how to make subprime mortgages.

DB:  When you read the stories of the time, all the reports, including the Wall Street Journal, said the failure of the Superior Bank may have cost taxpayers between 1 and 2 billion dollars.  It’s reported that between 1400 and 1700 savings accounts were gutted at Superior. How many people ended up losing their money at Penny Pritzker’s bank while she was busy working with her people to be sure that Wall Street got in real deep.  She started with Meryl Lynch, which is also gone.

TA:  These are smart people.  Genius doesn’t have a connotation of ethics.  Genius is genius unto itself.  Let’s leave the ethics equation out of being a genius. The Pritzkers are absolute geniuses at understanding the tax system and investing and put it to their benefit.  Warren Buffett is in awe of the Pritzkers.  They gave Warren Buffett their Mermin group to manage for them and then he will buy them out as it performs over the years.

DB:  So Warren Buffett is one of Penny’s managers?

TA:  The Pritzkers, years ago, sold Buffett 40% of the Mermin group with the other 60% acquired by Buffett over a 10 year period based on how well the Mermin group performed. As Warren made the Mermin group more profitable, the Pritzkers got more money, as he had to keep buying it from them.   That’s how they let him manage the asset for them.  You cannot appreciate their sheer genius until you study all the stories about them.  I have run across no family as bright, quick or well connected – with a White House pass.  And any day, Penny Pritzker will probably be nominated as Secretary of Commerce by Congress.

DB:  Some of those hundreds of people who lost their savings at Superior Bank lived in the same neighborhood as Obama.  He knew.  He got complaints from people about what Penny was doing, back in the day.

TA:  Yes.  But Penny and the Pritzkers are a special class of privilege – they are immune.  Some major media are finally picking up on this story, but it got a pass four years ago because of the influence of the Pritzker family, which buys both sides of the isle.  They are non-partisan, neither republican nor democrat.  They will support whoever the incumbent is or is going to be.  They invest in people, many of them being politicians, of course.

Dennis J. Bernstein is a host of “Flashpoints” on the Pacifica radio network and the author of Special Ed: Voices from a Hidden Classroom.  You can access the audio archives at He can be contacted at

1 comment:

  1. Must read for anyone interested in exactly who owns our government, and the corporate welfare state.