Posts Tagged ‘Angelo Mozillo’

Obama’s National Finance Chair Pritzker At Epicenter of Sub Prime Crisis

July 23, 2008

Well, Obama’s been at it again.

This candidate who so boldly promised that he would be so different – and who has since demonstrated just how cynical he is to even make such a claim – has taken on yet another senior level campaign representative who is tied to the very worst scandal that is currently dragging this country’s economy down.

Penny Pritzker, Barack Obama’s National Finance Chair, has – as Ricky Ricardo used to put it – “some ‘splainin’ to do.” And Barack Obama has his own explaining to do – for naming her to his campaign in the first place. Pritzker has secured about $200 million dollars in campaign funds for Obama, but there’s a definite down side if people become aware of her past.

John R. Emshwiller writes an article based on the FDIC Report’s own finding and conclusions:

For the Pritzker family of Chicago, the 2001 collapse of subprime-mortgage lender Superior Bank was an embarrassing failure in a corner of their giant business empire.

Billionaire Penny Pritzker helped run Hinsdale, Ill.-based Superior, overseeing her family’s 50% ownership stake. She now serves as Barack Obama’s national campaign-finance chairwoman, which means her banking past could prove to be an embarrassment to her — and perhaps to the campaign.

Superior was seized in 2001 and later closed by federal regulators. Government investigators and consumer advocates have contended that Superior engaged in unsound financial activities and predatory lending practices. Ms. Pritzker, a longtime friend and supporter of Sen. Obama, served for a time as Superior’s chairman, and later sat on the board of its holding company.

The Office of Thrift Supervision report said:

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.

Emshwiller further notes:

Ms. Pritzker served as Superior chairman until 1994. During that period, Superior “embarked on a business strategy of significant growth into subprime home mortgages,” which were then packaged into securities and sold to investors, according to a 2002 report by the Treasury Department’s Inspector General.

“Superior was at the forefront of the securitizing of subprime mortgages,” says Timothy Anderson, a retired bank consultant who has studied Superior and other failed thrifts.

So we see that it was during the Clinton years that this financial strategy that would lead to such an incredible disaster had its geneisis, and it was in the liberal bastion of Chicago – and a liberal financier – who were at its forefront.

For a time, the strategy of making high interest home and auto loans to people with bad credit appeared to work like a charm, yielding big profits-and large dividends for the Pritzkers. But it was essentially blood money profits made mainly on the what Moe Bedard referred to as “foreclosure blood and misery of millions of Americans.”

People like the Pritzkers made money if people paid the high-interest loans; and they made money if they didn’t through the ensuing foreclosures.

It only became a problem for the banks when the overly inflated housing market values came down to earth and people who owed more on their homes than they were worth began walking away from those high interest subprime loans in large numbers.

A USA Today story by Ken Dilanian notes that:

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.

So now we have a decided pattern – beyond the Chicago political link – to Obama himself. He named Jim Johnson to head his vitally important Vice Presidential Selection Committee. A Wall Street Journal story showed how Johnson received favorable treatment on personal loans from major sub-prime player Countrywide Financial Corp. Johnson – former chairman of now also in trouble Fannie Mae – went to Countrywide repeatedly to get new loans at sweetheart rates as a FOA (Friend of Angelo [Mozillo]). Johnson essentially received kickbacks received kickbacks in the form of great mortgages and lax underwriting guidelines on 3 properties totalling $1.7 million while millions of the “little people” crashed and burned.

In a prepared statement, the Obama campaign noted that Ms. Pritzker was never accused of wrongdoing by regulators in connection with Superior, and that her family agreed to pay $460 million to help defray the costs of Superior’s collapse.

That isn’t quite true. Rather, the federal regulators were simply never fully able to sort through all the flawed accounting and masked operating losses to find the smoking gun, and the offer of several hundred million dollars made them willing to quit looking. You don’t pay 460 million bucks unless you have an awful lot of skeletons in your closet. Pritzker was able to buy her way out of jail.

And please tell me something: just how is Barack Obama supposed to produce “change” when he surrounds himself with the same “old” greedy executives that have profited handsomely in this mortgage and housing crisis, and even pioneered the despicably greedy concept itself? Just what kind of benighted fool is going to think this guy is going to be one iota different? The sub prime scandal originated in Obama’s backyard, and Obama keeps handpicking figures tied to it.

Moe Bedard writes an article titled “Pritzker, Predatory Subprime Pioneer, Still On Obama Team” that provides a lot of documentation and includes a lot of links to other sources of information. The more you read, the more you learn about Obama’s choice for finance chair.

People had better start taking a serious look at Barack Obama – and ALL the horrendous people he has been keeping around him for years – before its too late.

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