Hyatt heiress worth $1.8bn with checkered past dealings is top pick for secretary of commerce. What was that about change?
Here’s why Americans get cynical about politics: they think they are voting for hope and change and, instead, they find themselves confronted by Wednesday morning’s congressional hearings starring Hyatt heiress and Chicago businesswoman Penny Pritzker, President Barack Obama’s pick to be the next secretary of commerce.
I guess you could say every penny counts: Pritzker’s estimated net worth is somewhere between $1.5 and $1.8bn.
For anyone seeking a cabinet post, this sounds like a series of must-miss events. But in the fallen-into-the-looking-glass world of Washington politics, none of this is a black mark. What’s important is Pritzker’s fundraising prowess, which is considerable. According to published reports, she was responsible for bundling about $800m for Obama’s two successful campaigns for president.
Pritzker’s track record with the 99% is another matter. Before Pritzker receives the formal congressional imprimatur, here’s a quick review.
The Pritzker family is a multi-tentacled financial beast. There is the high-end senior housing chain Vi (founded by Pritzker herself), numerous real estate investments, trusts in the Bahamas and, of course, the Hyatt chain of hotels.
But even the Pritzkers make financial mistakes. And once upon a time, there was Superior Bank. The Pritzker family bought Superior Bank in the late 1980s, and were pioneers not only in the use of subprime investments, but in watching them blow up. Superior crashed into oblivion in 2001, but not before Penny Pritzker – a former bank chairwoman who continued to sit on its board – penned a note to staff, assuring them not only of ongoing plans to recapitalize the bank but of management plans to maintain a “leadership position in subprime lending.”
Customers with more than $100,000 on deposit at the bank were never made whole. They received more than the FDIC said they were due but not the entirety of their deposits. All together, those depositors lost more than $10m due in large part to Superior’s subprime gambles. The Pritzkers settled with the federal government for more than $400m, and that amount was ultimately reduced when they negotiated a one-time payment instead of paying the money out over a period of years.
Housekeepers at Hyatt – where Penny Pritzker has been a board members since 2004 – are another group she hasn’t won over. They point to years of tension between their union and management over such practices as bringing in low-paid temporary workers who take over former well-paying full-time housekeeping positions. “A poverty trap,” says Cathy Youngblood, a housekeeper at a West Hollywood, California Hyatt, who has emerged as a spokeswoman for Unite Here, the union representing the housekeepers.
These rather sorry episodes did not stop Obama from describing Penny Pritzker at her White House Rose Garden nomination ceremony earlier this month as “one of our country’s most distinguished business leaders” someone who “knows that what we can do is to give every business and every worker the best possible chance to succeed by making America a magnet for good jobs.”
The Obama administration has also been sensitive to offshore investments – there was a big strike against former presidential candidate Mitt Romney. But Pritzker, naturally, has them too. They were the heart of the lawsuit filed by Pritzker cousins Liesel and Matthew in 2002, who claimed theirs had been all but cleaned out after their parents divorce. The case ultimately settled out of court for more than $500m. As for Penny Pritzker, she claimed more than $53m in income from those offshore trusts last year. Political backers deflect Mitt Romney-style criticisms by pointing out they were set up by her grandfather, and she has nothing in the way of day-to-day control over them.
Safely ensconced in his second and final term, President Obama finds all this dubious financial history by a longtime top fundraiser easy to overlook. But what messages does it really send? All in all, it sounds just like the right background for Commerce cabinet pick – if we are talking about the Commerce Department of a third world country.
What was that again about hope and change?