Bundlers and lobbyists and bailout recipients, oh my! The White House announced appointments for two key positions yesterday, and both raised eyebrows after Barack Obama’s pledge to keep influence-peddling out of the administration. Penny Pritzker got the appointment to Commerce, assisted in no small measure by her bundling for both Obama presidential campaigns, while former telecom lobbyist Tom Wheeler will chair the FCC. After a discussion on the politics of gun control, CNN’s Jake Tapper asks his panel — is this change you can believe in?
President Obama announced Thursday that Penny Pritzker, an ex-national finance chair for the Obama campaign, will lead the Commerce Department. If confirmed, she will be the richest cabinet secretary in U.S. history. The president already skipped over her for the nod once.
The New York Times said of Pritzker in 2008, “Ms. Pritzker’s family is renowned for finding ways to avoid paying taxes on its wealth. The Pritzkers were pioneers in using tax loopholes to shelter their holdings from the internal revenue service, and many of their dealings have never been made public.” …
On Wednesday, the president named another campaign bundler, Tom Wheeler to head up the Federal Communications Commission. Wheeler spent two decades as a lobbyist representing the two industry groups that represented every single cable company, and every single cellphone provider.
Pritzker has more problems than the whiff of pay-for-play in this appointment. Pritzker had been one of the original names floated after the 2008 election for a Cabinet choice, but her ties to the kind of subprime lending that blew up the economy — and especially the securitization that ended up infecting the financial markets — ended up scotching the deal. In testimony to the Treasury IG probing the subprime failure, one witness said that Pritzker and the other owners of her bank, Superior, “were to sub-prime lending, what Michael Milken was to junk bonds.” Here’s another piece from the Wayback Machine:
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…
[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…
“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.”
Politico notes the, er, difficulty this might present Democrats during a confirmation hearing:
The big pick, in terms of headline potential and Obama’s personal involvement, came on Thursday morning with the commerce secretary nomination of Chicago financier and longtime Obama campaign fundraiser Penny Pritzker, whose family ties to a subprime lender, offshore bank accounts and the labor strife-wracked Hyatt hotel chain are likely to make for lively confirmation hearings. …
Reaction to the Pritzker pick among Republicans was muted but not especially friendly.
“Every nominee’s offshore tax avoidance activities should be examined as part of the nomination process,” Sen. Chuck Grassley (R-Iowa) said in a statement late Thursday. “If the commerce committee doesn’t explore these questions with the nominee, I plan to do so, but I hope the committee will give the tax history a serious look. This is the second nominee in a row, Jack Lew being the first, who’s associated with the kind of tax avoidance activity that the president dismisses as fat cat shenanigans for others. It’s hypocritical to overlook tax avoidance when it’s convenient.”
Obama spent all last year railing against fat cats getting government bennies while shoving their wealth off-shore. He also spent the last several years attacking capital investors for greed in the financial collapse of 2008. The Pritzker nomination might very well be the most hypocritical and cynical move from this administration yet.