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Obama Taps Billionaire Fundraiser Penny Pritzker for Commerce Despite Anti-Labor, Subprime Legacy

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Billionaire business tycoon and former Obama fundraiser Penny Pritzker appears headed for confirmation as commerce secretary, despite concerns about her business dealings. Pritzker and her family owned Superior Bank, a Chicago-based firm that collapsed after the Pritzkers expanded subprime lending. With net worth of more than $1.5 billion, Pritzker stands to be one of the wealthiest Cabinet secretaries in history. Her family started the Hyatt Hotel chain, which has come under scrutiny for her clashes with labor unions. The AFL-CIO says Hyatt has exhibited a broad pattern of labor abuses, including aggressive outsourcing, low wages and the mistreatment of housekeepers. We’re joined by David Moberg, senior editor of In These Times magazine. His recent article is “3 Troubling Things To Know About Billionaire Penny Pritzker.”

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This is a rush transcript. Copy may not be in its final form.

AARON MATÉ: We turn now from the Chicago school closings to a former Chicago Board of Education member: the billionaire business tycoon Penny Pritzker. She appears headed for confirmation as commerce secretary. Pritzker’s family started the Hyatt Hotel chain, and she is a close friend of President Obama. In 2008, she served as the national finance chair of his presidential campaign.

At Pritzker’s confirmation hearing Thursday, Republican Senator John Thune of South Dakota asked her about her ties to Superior Bank, a Chicago-based bank owned by her family. Superior failed after Pritzker and her family expanded subprime lending.

SEN. JOHN THUNE: Ultimately, there were a number of the banks, uninsured depositors that had claims that they lost over $100,000 worth of savings, including one who reportedly deposited her entire retirement account with Superior a month before it failed. What do you have to say to those depositors who lost significant sums of money because of this venture?

PENNY PRITZKER: Well, Senator, I regret the failure of Superior Bank. It’s a—it was not an outcome or a situation that I’m—you know, I feel very badly about that.

AARON MATÉ: If confirmed, Penny Pritzker, with a net worth of over $1.5 billion, would be by far the wealthiest member of the current Cabinet and one of the wealthiest Cabinet secretaries in history. Bloomberg News reported Pritzker recently inadvertently understated a portion of her income by at least $80 million in a form required for her nomination. Last year, she received over $53 million in consulting fees from her family’s offshore trust in the Bahamas.

AMY GOODMAN: As an heir of the Hyatt Hotel chain and former head of the Chicago Board of Education, Pritzker has also come under scrutiny for her clashes with labor unions. According to the AFL-CIO, the Hyatt has exhibited a broad pattern of labor abuses, including aggressive outsourcing, low wages and the mistreatment of housekeepers. Both the hotel workers’ union UNITE HERE and the Chicago Teachers Union have opposed Pritzker’s nomination. Chicago Teachers Union President Karen Lewis said, quote, “As a member of the board of education, she has worked to close schools, destabilize neighborhoods and disrupt the economic lives of thousands of public school employees.”

Well, for more, we’re joined by David Moberg, senior editor of In These Times . His recent article is headlined “3 Troubling Things To Know About Billionaire Penny Pritzker.”

David Moberg, welcome to Democracy Now! What are those three troubling things?

DAVID MOBERG: Well, one of the things has to do with that anti-labor record. And it’s a record not simply of attacking labor unions, although there are two prominent examples. One is this battle with UNITE HERE, where Hyatt has refused to reach an agreement with the hotel union that’s based on the pattern that other major hotel chains have already adopted, and it has pursued a pattern of subcontracting of work and a general harsh treatment of its workforce at the hotels. In terms of another prominent labor clash, the—Penny Pritzker was one of the prime instigators of passage of a law in the state of Illinois that took away many of the rights from the Chicago Teachers Union and provoked a long strike here in Chicago. So, first of all, there’s been this specific kind of anti-labor record, but more broadly, there’s been a pattern of policies the Pritzkers have promoted that work to the disadvantage of working-class people in Chicago and around the country.

And the—there is also a history of conflict of interests that the Pritzkers have shown in terms of the ways they have used their public ties to advance their own private interests. For example, in terms of Superior Bank, which is one of the other important things to know about the Pritzker record, they got, as a family, financial aid from the federal government to take over the failed savings and loan. And when they ran it into the ground and left many of the depositors high and dry, they managed to set up an arrangement with the Federal Deposit Insurance Corporation that permitted them to actually make money off of the failure of the bank, and all of this at a time that was—the bank was—leading to these lawsuits for many of the depositors.

I think that there are at least two reasons why this nomination was particularly disappointing from Obama, even thought it’s quite understandable, given the close ties that Obama and Penny Pritzker have had. One of those troubling issues is economic. We’re still coming out of one of the worst recessions in history of the country, and that recession was triggered by a housing bubble based on subprime lending and securitization of those subprime loans that then collapsed as the economy began to slow down. And Penny Pritzker’s and the Pritzker family activities through Superior Bank really established the subprime lending industry and set the stage for this eventual collapse of the economy. Overall, the business practice record of the Pritzkers is simply not what the president of any party, but especially the Democratic Party, should be advancing as a model.

And the second concern beyond this kind of economic issue, broadly speaking, that’s hurt the vast majority of working people in this country, there is a political issue. And as a lot of people have noted for a number of years, that the Democratic Party, that once claimed to be the party of working people, has drifted more and more to try to compete with the Republican Party to be the party of the rich. And the kind of ties that are reflected in the links of Obama to Pritzker and through Pritzker beyond to many of the other financial titans in the Democratic Party, that all represents a kind of drift of the party itself and of American politics away from any kind of representation of workers’ interests. So, it’s—

AMY GOODMAN: David Moberg, I wanted to ask you about the previous nomination. President Obama had already attempted to nominate Penny Pritzker—he did nominate her in his first term, but she ultimately had to pull out. Can you talk about what the reasons were, and especially this issue of offshore accounts and the family’s infighting over the enormous wealth and dividing it up?

DAVID MOBERG: Well, basically, the nomination was withdrawn for fear of the bad publicity that might come out concerning all these different activities of the Pritzkers. The family itself, including Penny Pritzker, have long relied on a variety of schemes of avoiding paying taxes, which itself is hardly the kind of model that one would hope for from a commerce secretary. And much of that has been done through offshore accounts and shelters of money. A lot of accounts depict Penny Pritzker as if she were simply kind of an unwitting beneficiary of things done by other people or, in some cases, an unwitting victim of things done by other people, so that the offshore accounts are often described as having been set up before she reached adulthood. Well, she’s been an adult quite a long while, and there was no need for her to continue to shelter income in these tax havens overseas. So, I think that the administration was worried about how this would look. But increasingly, it doesn’t seem to care that much. And given the kind of kid gloves treatment from both most of the Republicans and Democrats on the committee, there seems to be good reason for them not to worry about any bad publicity this time around.

AARON MATÉ: David, also, as we’ve noted, Pritzker is a longtime member of the board of directors of the Hyatt Hotel chain and heir to the Hyatt fortune. Some Hyatt housekeepers say they clean as many as 30 rooms a day, getting paid as little as $2 per room. Workers at the Hyatt Andaz hotel in West Hollywood, California, have filed a complaint with the National Labor Relations Board over an electronic tracking system used to monitor their productivity. Al Jazeera recently spoke to Hyatt housekeeper and activist Cathy Youngblood about the worker’s conditions.

CATHY YOUNGBLOOD: I’ve been crisscrossing the country talking to Hyatt employees in the different respective hotels around the country. We have things like we need proper tools and equipment, such as fitted sheets, lighter vacuum cleaners, adjustable tools. We do need for management to listen when we suggest a better way of doing things. We are the ones that work in the hotel. We are the front line. We are the first responders. And I don’t think any member of the board has worked in a hotel. So, if they would just sit down and listen to someone like me, I think they could learn a lot. Of course, I can learn a lot from them. But also, if you are a business person, wouldn’t you want to know what’s going on in a hotel?

AARON MATÉ: That’s Cathy Youngblood. The housekeepers are represented by the union, UNITE HERE Local 11. David, do you think that this nomination is trying to send a message to unions?

DAVID MOBERG: I don’t think it was intended as any kind of message to unions, necessarily. I think it represents a kind of almost callous disregard for the concerns that unions have, for the interests that the unions represent and for the importance of labor unions both to the overall economy and to the political fortunes of the Democratic Party. So I suspect it may not have been given a great deal of consideration. And, indeed, UNITE HERE, which eventually came out strongly in opposition to the nomination, had hesitated for a while about whether it was going to make a big campaign of it.

AMY GOODMAN: David Moberg, finally, Thursday, the confirmation hearing of Penny Pritzker, certainly the Republicans would have had a lot to ask Penny Pritzker. What did you think of their questioning? Not to mention the Democrats.

DAVID MOBERG: Well, I think that a lot of things were simply not pursued, and I think it represents a kind of deference that gets shown to people of great wealth in many of these situations by both parties. The Republicans, by inclination, are less likely to be grilling people about how they’ve accumulated their fortunes, and Democrats are vying for the support of the same group of rich people as much as they can. So I think that the softball questioning reflects this more troubling turn of the politics of the country away from thinking about broad interests of working people, not just of labor unions as institutions, and towards a kind of difference towards the rich. And that’s bad economic policy and bad politics, I think.

AMY GOODMAN: David Moberg, I want to thank you for being with us, senior editor at In These Times . We will link to your article, “3 Troubling Things to Know About Billionaire Penny Pritzker.”

This is Democracy Now! When we come back, the legendary author, poet, activist, Alice Walker. Stay with us.

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