Post by jeffolie on Jun 13, 2008 14:26:14 GMT -6
Pritzker, Predatory Subprime Pioneer, Still On Obama Team
By Moe Bedard on June 12th, 2008
& Aaron Krowne
Barack Obama:
“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.”
The media firestorm this week directed at Barack Obama’s manager of his vice presidential search team prompted the swift resignation of Jim Johnson for allegedly receiving “favorable rates” from Countrywide Home Loans.
He received kickbacks in the form of great mortgages and lax underwriting guidelines on 3 properties totalling $1.7 million.
Wall Street Journal:
Perhaps the most unusual of Mr. Johnson’s loans was one for more than $1.5 million last year for a real-estate project in Big Timber, Mont. At the time he got the loan, what the records indicate were Mr. Johnson’s monthly obligations were nearly twice his stated monthly income, according to documents and to people familiar with the matter.
The records say Mr. Johnson’s “total income” was $55,834 a month, while his “total obligations” were $97,708.97 a month. The result was a total debt ratio of 175%, which Countrywide’s records say was “too high.”
Now, the media is spot on for not relenting their prime time attacks on Obama and Johnson. They definitely deserved the bashings they received. You simply cannot have “change” when your surround yourself with the same “old” greedy executives that have profited handsomely in this mortgage and housing crisis.
Housing Blood Money - Profits made mainly on the foreclosure blood and misery of millions of Americans.
The profits and mortgages made by these lending corporations, Wall Street and investors over the last 3- 5 years was nothing more than fools gold and snake oil. The oil that I am speaking of is real estate and mortgages. In particular Alt-A and subprime loans.
But there is another close associate on Barrack Obama’s campaign that has flown below the media “moral character” radar… someone who makes Johnson look like an amateur.
Of course I am speaking of Penny Pritzker, billionaire (net worth $2.8 Billion US and ranked 135th on the Forbes List of Richest Americans) hotel heiress (Hyatt) and president of the Pritzker Realty Group. Also notably former president of the failed Superior Bank in Chicago. Currently she is the national finance chairwoman of Barack Obama’s presidential campaign.
Let’s take a look at the Bank that Pritzker was connected to. She knew exactly what she was doing and what the bank’s loans were doing to the people of her community and of our country:
OTS Closes Superior Bank FSB; Hinsdale, Ill. Thrift is Insolvent
Superior Bank suffered as a result of its former high-risk business strategy, which was focused on the generation of significant volumes of subprime mortgage and automobile loans for securitization and sale in the secondary market. OTS found that the bank also suffered from poor lending practices, improper record keeping and accounting, and ineffective board and management supervision.
Penny Pritzker and Superior Bank - Is she the innovator who founded the predatory subprime business model in 1993?
A quick walk down the Google memory lane shows that at minimum she was one of the pioneers of the model that has blown sky high now. Let’s take a look at how Pritzker and Bear Stearns started the subprime wave that has now turned into a foreclosure tsunami that is engulfing or Nation and now the world:
The purchase of Superior Bank:
The thrift had come into the Pritzker fold in 1988, when Jay Pritzker and Alvin Dworman-old social friends and partners in several past business ventures-put up $42.5 million for the insolvent Lyons Savings Bank, as it was then called, in return for an estimated $645 million in federal tax credits and loan guarantees. (By one estimate, it would have cost the government $200 million less simply to shut Lyons down.)
Although Dworman had agreed to run the renamed Superior Bank out of his New York office, Jay deputized his niece Penny-a Harvard educated go-getter who had just earned her law degree and M.B.A. from Stanford-to help keep tabs on the investment. She served as chairman of Superior from 1989 to 1994, long enough for the bank to regain its financial health and embark on an aggressive new strategy, making high-interest home andauto loans to people with bad credit. For a time, that strategy appeared to work like a charm, yielding big profits-and large dividends for the Pritzkers and Dworman.
Chicago Magazine - Tremors in the Empire
The institution’s failure is “a tale of gross mismanagement,” says George Kaufman, a finance professor at Loyola University Chicago. “[Superior] was engaged in relatively unethical practices, fancy-footwork accounting, playing it very close to the edge.” Kaufman says many share in the blame for the mess-the bank’s managers, directors, and auditors, as well as banking regulators-but he also wonders how the Pritzkers, as co-owners, could have allowed it to happen. “One of the great mysteries to me is what the Pritzkers were up to, why they took these chances,” he says. “It makes no sense given their wealth and visibility.”
Maybe having the regulators in their back pocket had something to do with it? The tax giveaways to the Pritzkers in setting up the bank was your first sign. But “boring” financial stuff like this never makes the front page.
USA Today:
“Superior was effectively facilitating very sleazy lending,” said Bert Ely, a Washington, D.C., banking consultant who testified before Congress on the Superior failure.
Superior, co-owned by Pritzker family trusts, began focusing on subprime loans in 1993, according to the FDIC Inspector General’s report. At the time, Pritzker was the board’s chair. She left the board in 1994 and continued as a director of the bank’s holding company. In 2002, the Pritzkers agreed to pay, through trusts, $460 million in a settlement with the government relieving them of liability.
“I regret that Superior Bank failed,” Pritzker told USA TODAY. “My family voluntarily agreed to pay the FDIC $460 million … without litigation or any allegation by federal regulators of wrongdoing. I am proud of how my family responded to this situation.”
As I detailed before it is unlikely that Pritzker regrets anything:
The FDIC also agreed to pay the Pritzkers 25 percent of any claim won in a lawsuit against Ernst & Young. Since the FDIC is now suing for $548 million, the Pritzker share could be $137 million. On top of that, the agreement stated that the Pritzkers get half of any civil penalties from such a lawsuit (after certain agency expenses). The FDIC is asking for triple damages, or $1.64 billion; the Pritzker share could be over $800 million.
Even taking into account the “record” settlement they made with the FDIC, the Pritzkers could make more than $700 million in additional profit for running a financial institution into the ground. They had already profited handsomely, sharing in the more than $200 million in dividends to the owners in the ’90s.
The Pritzker family controlled half the board seats of the bank’s holding company, which benefited from all that dividend income, and the Pritzker Organization’s chief financial officer, Glen Miller, chaired the bank’s audit committee. Penny stepped down as the bank’s chairman in 1994, but remained as director of its holding company. Penny and the rest of the Pritzker family who were involved were responsible, no doubt about it. “We didn’t know” or “Blame the auditors” as a story just does not fly.
The FDIC:
Using “liberal interpretations of accounting principles” Superior was able to “report impressive net income figures that masked the net operating losses the institution was actually experiencing.”
Sounds familiar! Looks like these methods were adopted by many other banks subsequently (Countrywide, WaMu, Wachovia, we are thinking of you).
Chicago Magazine:
Those phony “profits,” by the way, allowed Coast-to-Coast Financial Corporation, the holding company owned jointly by the Pritzkers and Dworman, to collect more than $200 million in dividends from 1993 to 1999-money the bank desperately could have used as it tottered toward insolvency.
Pritzkers Response:
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.
Well Mr. Poorman, the FDIC and the OTS seem to disagree with you sir. The bank failed. Your words are empty and do nothing to curb the facts or take the spot light off of your client, Penny Pritzker.
When is the media going to give Obama the media bashing he deserves for his contradictory speeches and hollow words? How can you bash predatory lenders for snookering Americans when your campaign finance chairwoman was involved in snookering the very borrowers in your own community?
I am surely not a rocket scientist, but to me, this seems to be a pretty clear connection of culpability.
Mr. Obama, Penny Pritzker was as involved in predatory lending as you can get and it’s time to address that which you have been sweeping under the campaign “money” rug.
Money and billionaires seem to put blinders on our presidential candidates. It’s time to help Obama take them off and place a media spot light on Pritzker and the truth!
Penny Pritzker and the Superior Bank Scandal Reads:
FDIC Failed Bank Information - Superior Bank
OTS Closes Superior Bank FSB; Hinsdale, Ill. Thrift is Insolvent
OTS Announces Resolution of Charges Against Auditor of Closed Superior Bank FSB
Ernest & Young Order from the OTS - PDF
Ernst & Young LLP Stipulation and Consent to Issuance of Consent Order - PDF
Ernst & Young to Pay U.S. Over Bank Collapse in ‘01 - NY Times
Dennis Berstein:“Obama’s Sub-Prime Conflict”
Earl Ofari Hutchinson:“If Obama’s For Real on the Sub-Prime Crisis, He’ll Dump His Campaign Finance Chair”
Bob Feldman:“Obama Campaign’s Pritzker/Superior Bank S&L Scandal Link?”
Flashpoints Radio:“An investigative report into Penny Pritzker”
Moe Bedard - Barack Obama was in Chicago at the time of the Superior Bank failure & has full knowledge of what went on and the cause of the collapse.
Moe Bedard - Is Obama for the People or the Banks?
loanworkout.org/2008/06/12/obamas-finance-chair-is-penny-pritzker-the-founder-of-subprime/
Predatory Subprime Pioneer On Obama Team
By Moe Bedard on June 12th, 2008
& Aaron Krowne
Barack Obama:
“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.”
The media firestorm this week directed at Barack Obama’s manager of his vice presidential search team prompted the swift resignation of Jim Johnson for allegedly receiving “favorable rates” from Countrywide Home Loans.
He received kickbacks in the form of great mortgages and lax underwriting guidelines on 3 properties totalling $1.7 million.
Wall Street Journal:
Perhaps the most unusual of Mr. Johnson’s loans was one for more than $1.5 million last year for a real-estate project in Big Timber, Mont. At the time he got the loan, what the records indicate were Mr. Johnson’s monthly obligations were nearly twice his stated monthly income, according to documents and to people familiar with the matter.
The records say Mr. Johnson’s “total income” was $55,834 a month, while his “total obligations” were $97,708.97 a month. The result was a total debt ratio of 175%, which Countrywide’s records say was “too high.”
Now, the media is spot on for not relenting their prime time attacks on Obama and Johnson. They definitely deserved the bashings they received. You simply cannot have “change” when your surround yourself with the same “old” greedy executives that have profited handsomely in this mortgage and housing crisis.
Housing Blood Money - Profits made mainly on the foreclosure blood and misery of millions of Americans.
The profits and mortgages made by these lending corporations, Wall Street and investors over the last 3- 5 years was nothing more than fools gold and snake oil. The oil that I am speaking of is real estate and mortgages. In particular Alt-A and subprime loans.
But there is another close associate on Barrack Obama’s campaign that has flown below the media “moral character” radar… someone who makes Johnson look like an amateur.
Of course I am speaking of Penny Pritzker, billionaire (net worth $2.8 Billion US and ranked 135th on the Forbes List of Richest Americans) hotel heiress (Hyatt) and president of the Pritzker Realty Group. Also notably former president of the failed Superior Bank in Chicago. Currently she is the national finance chairwoman of Barack Obama’s presidential campaign.
Let’s take a look at the Bank that Pritzker was connected to. She knew exactly what she was doing and what the bank’s loans were doing to the people of her community and of our country:
OTS Closes Superior Bank FSB; Hinsdale, Ill. Thrift is Insolvent
Superior Bank suffered as a result of its former high-risk business strategy, which was focused on the generation of significant volumes of subprime mortgage and automobile loans for securitization and sale in the secondary market. OTS found that the bank also suffered from poor lending practices, improper record keeping and accounting, and ineffective board and management supervision.
Penny Pritzker and Superior Bank - Is she the innovator who founded the predatory subprime business model in 1993?
A quick walk down the Google memory lane shows that at minimum she was one of the pioneers of the model that has blown sky high now. Let’s take a look at how Pritzker and Bear Stearns started the subprime wave that has now turned into a foreclosure tsunami that is engulfing or Nation and now the world:
The purchase of Superior Bank:
The thrift had come into the Pritzker fold in 1988, when Jay Pritzker and Alvin Dworman-old social friends and partners in several past business ventures-put up $42.5 million for the insolvent Lyons Savings Bank, as it was then called, in return for an estimated $645 million in federal tax credits and loan guarantees. (By one estimate, it would have cost the government $200 million less simply to shut Lyons down.)
Although Dworman had agreed to run the renamed Superior Bank out of his New York office, Jay deputized his niece Penny-a Harvard educated go-getter who had just earned her law degree and M.B.A. from Stanford-to help keep tabs on the investment. She served as chairman of Superior from 1989 to 1994, long enough for the bank to regain its financial health and embark on an aggressive new strategy, making high-interest home andauto loans to people with bad credit. For a time, that strategy appeared to work like a charm, yielding big profits-and large dividends for the Pritzkers and Dworman.
Chicago Magazine - Tremors in the Empire
The institution’s failure is “a tale of gross mismanagement,” says George Kaufman, a finance professor at Loyola University Chicago. “[Superior] was engaged in relatively unethical practices, fancy-footwork accounting, playing it very close to the edge.” Kaufman says many share in the blame for the mess-the bank’s managers, directors, and auditors, as well as banking regulators-but he also wonders how the Pritzkers, as co-owners, could have allowed it to happen. “One of the great mysteries to me is what the Pritzkers were up to, why they took these chances,” he says. “It makes no sense given their wealth and visibility.”
Maybe having the regulators in their back pocket had something to do with it? The tax giveaways to the Pritzkers in setting up the bank was your first sign. But “boring” financial stuff like this never makes the front page.
USA Today:
“Superior was effectively facilitating very sleazy lending,” said Bert Ely, a Washington, D.C., banking consultant who testified before Congress on the Superior failure.
Superior, co-owned by Pritzker family trusts, began focusing on subprime loans in 1993, according to the FDIC Inspector General’s report. At the time, Pritzker was the board’s chair. She left the board in 1994 and continued as a director of the bank’s holding company. In 2002, the Pritzkers agreed to pay, through trusts, $460 million in a settlement with the government relieving them of liability.
“I regret that Superior Bank failed,” Pritzker told USA TODAY. “My family voluntarily agreed to pay the FDIC $460 million … without litigation or any allegation by federal regulators of wrongdoing. I am proud of how my family responded to this situation.”
As I detailed before it is unlikely that Pritzker regrets anything:
The FDIC also agreed to pay the Pritzkers 25 percent of any claim won in a lawsuit against Ernst & Young. Since the FDIC is now suing for $548 million, the Pritzker share could be $137 million. On top of that, the agreement stated that the Pritzkers get half of any civil penalties from such a lawsuit (after certain agency expenses). The FDIC is asking for triple damages, or $1.64 billion; the Pritzker share could be over $800 million.
Even taking into account the “record” settlement they made with the FDIC, the Pritzkers could make more than $700 million in additional profit for running a financial institution into the ground. They had already profited handsomely, sharing in the more than $200 million in dividends to the owners in the ’90s.
The Pritzker family controlled half the board seats of the bank’s holding company, which benefited from all that dividend income, and the Pritzker Organization’s chief financial officer, Glen Miller, chaired the bank’s audit committee. Penny stepped down as the bank’s chairman in 1994, but remained as director of its holding company. Penny and the rest of the Pritzker family who were involved were responsible, no doubt about it. “We didn’t know” or “Blame the auditors” as a story just does not fly.
The FDIC:
Using “liberal interpretations of accounting principles” Superior was able to “report impressive net income figures that masked the net operating losses the institution was actually experiencing.”
Sounds familiar! Looks like these methods were adopted by many other banks subsequently (Countrywide, WaMu, Wachovia, we are thinking of you).
Chicago Magazine:
Those phony “profits,” by the way, allowed Coast-to-Coast Financial Corporation, the holding company owned jointly by the Pritzkers and Dworman, to collect more than $200 million in dividends from 1993 to 1999-money the bank desperately could have used as it tottered toward insolvency.
Pritzkers Response:
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.
Well Mr. Poorman, the FDIC and the OTS seem to disagree with you sir. The bank failed. Your words are empty and do nothing to curb the facts or take the spot light off of your client, Penny Pritzker.
When is the media going to give Obama the media bashing he deserves for his contradictory speeches and hollow words? How can you bash predatory lenders for snookering Americans when your campaign finance chairwoman was involved in snookering the very borrowers in your own community?
I am surely not a rocket scientist, but to me, this seems to be a pretty clear connection of culpability.
Mr. Obama, Penny Pritzker was as involved in predatory lending as you can get and it’s time to address that which you have been sweeping under the campaign “money” rug.
Money and billionaires seem to put blinders on our presidential candidates. It’s time to help Obama take them off and place a media spot light on Pritzker and the truth!
Penny Pritzker and the Superior Bank Scandal Reads:
FDIC Failed Bank Information - Superior Bank
OTS Closes Superior Bank FSB; Hinsdale, Ill. Thrift is Insolvent
OTS Announces Resolution of Charges Against Auditor of Closed Superior Bank FSB
Ernest & Young Order from the OTS - PDF
Ernst & Young LLP Stipulation and Consent to Issuance of Consent Order - PDF
Ernst & Young to Pay U.S. Over Bank Collapse in ‘01 - NY Times
Dennis Berstein:“Obama’s Sub-Prime Conflict”
Earl Ofari Hutchinson:“If Obama’s For Real on the Sub-Prime Crisis, He’ll Dump His Campaign Finance Chair”
Bob Feldman:“Obama Campaign’s Pritzker/Superior Bank S&L Scandal Link?”
Flashpoints Radio:“An investigative report into Penny Pritzker”
Moe Bedard - Barack Obama was in Chicago at the time of the Superior Bank failure & has full knowledge of what went on and the cause of the collapse.
Moe Bedard - Is Obama for the People or the Banks?
loanworkout.org/2008/06/12/obamas-finance-chair-is-penny-pritzker-the-founder-of-subprime/
Predatory Subprime Pioneer On Obama Team