oh brother, you are a jerk-off. securitization of subprimes was not banking practice in 2001. puh-leeze, you realy should avoid opining on anything related to economics, history, or culture or government policy or politics. maybe teacups should be your specialty, you seem to know something about that.

oh, and banking is even more complicated than the oil business, believe me. you really have no credentials to have any opinions whatsoever in this field. I took two banking law classes with a former Treasury deputy secretary, and I hesitate to make sweeping judgements. (although this morning, by chance, my managing parter seemed very intrigued about my opinions about Putin, the Russian economy and the sub-prime crisis)

so, xyz, we should just let Bush and the gang handle it, is that what you're saying? All us bloggers and amateurs should just shut up and let the experts, who created the mess for their own financial benefit, solve it? Because that won't end up hurting lots of people, I'm sure.

this morning, by chance, my managing parter seemed very intrigued about my opinions about Putin, the Russian economy and the sub-prime crisis)

You mean the UPS guy who delivered that shipment of masking tape and post-its to the office supply store you work at?

Next time, try to cut it short. Other people are waiting for their shipments too, you know.

Best not to feed the trolls, gents. If we ignore them, they will leave in search of dumb bunnies to eat.

Trolls aside, there is an extreme amount of room for some civil and colegial criticism here.

Neither JS, nor the links, make a relevant case against Pritzker. I'm not "defending" her, but noting that a relevant case has not been made. There may well be one. But it isn't here.

She also has an ugly history as the former chair of Superior Bank in Illinois, which (1) was created thanks to a giant S&L bailout by the government;

The logic here seems to be that the "S and L bailout" was an example of transfer payments to business interests who don't really deserve or need them (which I am inclined to agree with, as a generalization), that the general practice of such payments, sometimes colloquially termed "corporate welfare", is excessive in the US (which I also agree with), and that since she could be conceived of as a beneficiary, Pritzker must personally support "corporate welfare" (which is a non-sequitor; she could have opposed by bailout but nevertheless benefited once it was inevitable, for example), and that this makes her an unacceptable campaign finance chair for Obama (a second non-sequitor).

Of course, she probably does, and an Obama administration probably will be involved in "corporate welfare". It's just that he'll probably be less extreme, less corrupt, and more fair that John McCain in this regard, and won't "bomb, bomb, bomb Iran" as a bonus. And that you haven't demonstrated anything about Pritzker here.

(2) then helped invent the securitization of subprime mortgages; and

Is this true? By my understanding of the links, you may be making a very serious error here. You may be mistaking sub-prime lending, which is described, for bundling and sale of subprime loans, which is an altogether different matter.

Subprime loans are loans to people or companies with poor credit histories. The alternatives to subprime lending are to either deny such borrowers access to capital at all, or to legally force lenders to give them loans at that same rates that those with better credit histories pay (and eliminate any incentive beyond personal ethics for maintaining a good credit history, as well as the relationship between interest rates and risk). Neither of these alternatives is necessarily "progressive". This is a tricky issue. Almost everybody would like to help potentially responsible "subprime" borrowers regain their credit. Access to credit is a very valuable thing. Ideologues who oppose all aspects of capitalism may not agree, but it is.

The mortgage crisis was caused by incentivizing primary lenders to overvalue the collateral (houses) (because they could quickly sell the loan to bundlers and didn't have to worry about whether it was subsequently repaid); subprime mortgage borrowers have a relatively modest default rate overall and have little or nothing to do with it. Progressive should not blindly accept media attempts to blame "subprime borrowers" (invariably depicted as Hispanic) for the "crisis". The crisis, to the extent that it even is one, was not created by poor people.

(3) then collapsed in 2001 thanks to massive financial chicanery.

This could be highly relevant. What was Pritzker's precise role? Was she complicit? Did she fail in oversight? Or was she a victim? Details, please.

Interestingly, she lives in a fancy Chicago neighborhood just a short stroll away from Austan Goolsbee, a University of Chicago professor who's one of Obama's main economic advisors. It's really quite wonderful how Goolsbee can maintain his deep admiration for the Free Market while living a few blocks away from billionaires who use massive government power to create and subsidize their businesses.

None of this seems very relevant. Where would you expect her to live? Does Goolsbee necessarily control or endorse other peoples' behavior just because they live in the same neighborhood? Not that any bad behavior by Pritzker has yet been demonstrated.

Does the domain of Stutts just cover the Ivy League, and do other schools count as well?

I concur. This is an extremely weak post by Mr. Schwarz.

Are we casting aspersions now based on the 'fancy neighborhoods' that somebody lives close to? What the hell is that about?!

And I'm not sure what someone being the 135th richest person in America has to do with anything. Should everyone who works for a Presidential candidate be below a certain income level?

This comes off as a vague, fumbling attempt at a smear of the Obama campaign. Look, I think the guy deserves scrutiny. And eight million pundits a day keep telling me so. But if this is the best you can come up with it's pretty pathetic.

I concur. This is an extremely weak post by Mr. Schwarz.

Are we casting aspersions now based on the 'fancy neighborhoods' that somebody lives close to? What the hell is that about?!

And I'm not sure what someone being the 135th richest person in America has to do with anything. Should everyone who works for a Presidential candidate be below a certain income level?

This comes off as a vague, fumbling attempt at a smear of the Obama campaign. Look, I think the guy deserves scrutiny. And eight million pundits a day keep telling me so. But if this is the best you can come up with it's pretty pathetic.

Harold:

You should look at the GAO report I linked to. You will see that Superior Bank was:
1) Very much involved in securitizing subprime loans
and
2) Also engaged in various forms of accounting malfeasance of which (shades of Enron here) the auditing firm was party to.

We can of course debate how involved Pritzker was in all this. And I agree this is fairly irrelevant on a practical level. Though the small, small universe of the elite never fails to amaze me.

securitization of subprimes was not banking practice in 2001.

yeah, really. at that point people were investing in artificial electricity scarcity. get your public goods scandals straight.

Should everyone who works for a Presidential candidate be below a certain income level?

Should any of them?

Man, how I love liberals. They're always so fair-minded, even towards the super-rich -- who, I'm sure you know, need all the fairness they can get.

Look, if I have to hear from the Obama campaign for the millionth time about his inspiring background as a community organizer on the south side, then I'd like some equal time for reporting on the folks he's hanging out with now.

I hope I'm not shocking anyone with this revelation, but there's a ruling class in this country, and their interests are not the same as yours or mine or the 99.9% of the population that isn't in the ruling class. Any Dem who associates with these people should be viewed with extreme suspicion. And I'm not talking about the merely rich, who have every reason to resent the way they're being left in the dust by the hyper-rich, I'm talking about the top-thousandth-of-one-percenters like Penny Pritzker.

As for this:
And I'm not sure what someone being the 135th richest person in America has to do with anything. Should everyone who works for a Presidential candidate be below a certain income level?

Yes, absolutely. There are three hundred million people in this country, so how about if the Obama campaign selects from among the 299,999,865 people below Mrs. Pritzker's income level? Quite a challenge, I know, but maybe they'll find an ambitious up-and-coming multi-millionaire they can work with. Some perfectly fine people can be found in the ten to twenty million net worth range, or so I'm told.

JOPI,
Reading the GAO report is exactly like looking early versions of Enron and the subprime crisis. Its almost like Superior laid the groundwork for what would follow and, even though they ultimately failed, they provided a roadmap for exponentially larger corruption of a deregulated financial system.

Stutts covers just one Ivy League school, I think. Which makes it even more amazing that so much evil could arise from such a small, run-down joint in Connecticut.

I just typed "Connecticult", interestingly. Fits too.

The post is about Obama and Pritzker, I think, not about Pritzker, and I agree with Hutchinson's point - we can't possibly think that Obama is serious about the subprime issue with this woman as his campaign finance chair.

But then, I wonder. Do I recall correctly that FDR placed Joseph Kennedy in charge of the SEC because he felt that a crook would be the best candidate to run the place? It's interesting to consider that dynamic here.

My second favorite thing from the GAO report (after the fact that the author is named McCool) is this paragraph:

OTS [Office of Thrift Supervision] consistently assumed that Superior’s management had the necessary expertise to safely manage the complexities of Superior’s securitization activities. In addition, OTS relied on Superior’s management to take the necessary corrective actions to address the deficiencies that had been identified by OTS examiners. Moreover, OTS expected the owners of Superior’ to come to the bank’s financial rescue if necessary. These critical assumptions by OTS ultimately proved erroneous.

Steve B

LOL. Good post!

xyz; See if YOU can get Putin to make that call to Nan(1-202-225-0100) every voice helps, YOU know. YOU call too.
WENT TO THE SAWMILL TODAY, to get a long piece of industrial band saw blade( They're 60 feet long x 20 in. steel, I'm thinking of doing a "winning of the west" style painting, 1803 to present. So Ernie, the guy at the saw mill says the saw mill cut way back and no old blades. " I'd heard you laid off 46 people this week", says I. "You think it's 'cause of the Canadian imports?" Ernie(everybody knows everybody here)says, "No, it's the housing market. The BIGGEST sawmill in the country has closed it's doors. Maybe in the spring we'll start up again."

After Superior Bank collapsed in July 2001, the Office of Inspector General's Feb. 2002 report concluded that "based on our review of the failure of Superior Bank it appears that some of the decisions made by Superior management rise to the level of insider abuse."

Yet Barack Obama accepted a $1,000 campaign contribution on September 14, 1999 from then Superior Bank board member Penny Pritzker. And after naming Penny Pritzker to be his 2008 presidential campaign's national finance chair on Jan. 31, 2007, Obama said that he was "proud that" the former Superior Bank official "has agreed to partner with me in this important venture."

In reference to the collapse of Penny Pritzker's Superior Bank, Office of Thrift Supervision Director Ellen Seidman told the U.S. Senate Committee on Banking, Housing and Urban Affairs on October 11, 2001 that:

"The problem still could have been solved. The people who own this institution not only have the resources to solve the problem, but also had promised to solve it, and then walked away a mere week before the deadline, making it impossible to find an alternative solution..."

On that same date, then-FDIC Director John Reich also said:

"...I would like to stress that Superior failed because of its own actions. Its board, its management decided to pursue a risky lending and securitization strategy...I want to stress that the bank's owners and managers bear the responsibility for the failure of Superior..."

According to the Feb. 2002 Office of Inspector General's Report, Superior Bank's management:

"1. did not implement OTS instructions to correct accounting ireegularities; 2. continued providing erroneous Thrift Financial Reports to OTs; 3. sold loans to holding company at less than fair market value, allowing to holding company to make an immediate profit of $20.2 million; and 4. extended credit to affiliates, which when added to the above loan sale to the holding company, totaled $36.7 million.

"The actions of the Board and executive management resulted in the transference of funds to holding companies, also owned by Superior's owners, at the expense of the institution's capital. This transference had the effect of unduly enriching those companies and, potentially, their owners."

If you listen to the Flashpoints audio you will see for paying back a dime on the dollar, PP and freinds got a 'get out of jail free' card. And 10-20 million-dollar-aires cannot twist the arms of billionaires for campaign contributions, ergo Miss Pritzker.

Steve B. -

I don't agree entirely with your post.

I certainly do agree that there is excessive income disparity in US, and that it has created a small group of people with almost bizarre amounts of wealth. Actually, this situation was the norm in the late nineteenth and early twentieth century as well. It doesn't really benefit anyone. Rich people were perfectly happy in the mid-twentieth century, when income disparity was at its lowest. I am absolutely convinced that progressive change in this country would benefit everyone at every income and wealth level. It's far better to be wealthy in a happy, sustainable country than to be a bit wealthier in a wretched one.

However, the solution is a more progressive income tax, an inheritance tax, a higher minimum wage, universal access to health care, universal access to good public education (from ABC to PhD), sane drug laws, etc. I don't at all see the point of condemning members of the "ruling class" (an exaggeration, since they have no actual true legal authority over others) who actually have something of a progressive vision. To say that they should be locked out of Democratic Party activism is not logical.

I will concede right here that, although the discussion on this board, if not the original post, has raised questions about Penny Pritzker in my mind, the fact that she chose to contribute to and work with Obama, rather than say, George Bush, despite possessing a lot of inherited wealth, biases me in a favorable direction toward her. At least she seems to have some clue. I will take a limousine liberal over a limousine conservative any day.

I gather from the posts and links that Pritzker was chairman of the board of directors of Superior. This may sound like a fine distinction, but the board of directors is far less involved in day to day operations of a company than are the actual executives like the CEO and the CFO. For those who aren't aware, briefly, the board of directors is in theory a group elected by the shareholders, who meets maybe once a month in most cases, hires the actual management, and provides broad oversight.

Now I am NOT making excuses for boards of directors here. They tend to be most undemocratically "elected" in reality, and they tend to be composed of executives and former executives. They are responsible for CEO salary inflation (an issue for another time), and have been notoriously poor at providing ethical and financial oversight. It's fair to say that the "board of directors" in the US today is a rather poorly functioning institution in many ways. I don't think that's even a controversial statement.

Nevertheless, it is quite plausible that board members would not have planned or been directly aware of chicanery that was going on at the day to day level. Maybe they should have been. A defense against charges of failing to provide sufficiently rigorous oversight may be a stretch here. But a claim of innocence and ignorance at the direct level may be quite credible.

Obama is an ambitious guy who is trying to be elected president. He is doing what he needs to do to be a viable candidate in the US system. I actually think that he has some merits, but that's almost beside the point. His opponent will be John McCain. Obama needs money, and he needs a campaign finance manager who can get it. Pritzker may have done a crappy job on the board of Superior, but she seems to be doing an okay job for Obama. I condemn any significant ethical irregularities, should they arise, but until then, let's try to keep John McCain from fulfilling Bush's vision of "four more years".

Isn't this whole thing to some degree a mirror of the whole "it's okay if you're a Republican" double standard of the MSM? Of course bad behavior by McCain doesn't excuse bad behavior by Obama, but still, what the heck is McCain's finance director up to? What's the history there?

it doesn't compare. nobody expects mccain to do anything that builds equity for ordinary people; but obama's supporters want him to help fix the deregulated markets and unfair trade agreements. this top-tier relationship makes them nervous and unhappy.

ps. there's already universal access to health care.

These vacuous "visions", progressive or not, and opportunistic alliances with the architects of financial disasters have no role to play in any serious pragmatic program for change.

Harold, I feel your pain, but the neoliberal strategy of dumping another bucket of shit and treacle on top of the usual crackpot realism is not helpful. If you truly believe in Obama as part of the solution, the best thing to do is discourage his anti-progressive actions and leave his vision, whatever that might be, to the care of his therapist.

I met Andy Warhol at a really neat party...

I clicked on the Stutts link out of macabre curiosity. Oh man, new depths of unfunniness. But the funny thing is (funny strange, not ha ha) the site exudes the same sort of smarmy "I'm Ivy but all the same I'm above it all" attitude as my loser law profs from Harvard (whether College of HLS) would blather all spring about how they wuz life-long Red Sox fans, cuz you know theyse just relar folks, hanging out with the werkers in the stands, despite their tony educational pedigrees. Ugh.

Obama is an ambitious guy who is trying to be elected president. He is doing what he needs to do to be a viable candidate in the US system.

Yes, absolutely. Couldn't agree more. Anyone who wants to be "viable" in our system has to cozy up to the super-rich. And what's the consequence of that? When those same super-rich run into a little problem with their S&L or bank, they get bailed out with our money.

Do you like this system, or would you like to change it? And if you want to change it, how? Maybe one way is, first of all, for us to be able to talk about the problem in a systemic way: that corruption isn't just a problem with "a few bad apples" like Duke Cunningham but something that happens to anyone who is "ambitious" and wants to be "viable."

As long as we're talking about political corruption in terms of the bagful of cash given under the table, or as long as we only talk about corruption when the other guys do it, none of this is going to change.

One more thing: often, when I point to the many and obvious flaws of a Dem candidate, I'm told: "Well, what are you gonna do? The Republican is worse!" My response is always that what I'm gonna do, first of all, is to try to correctly perceive who these people are. Because if we can't at least start with an accurate understanding of the world and the people in it, there's no hope.

Go ahead and vote for Obama, I know better than to try to talk you out of it. But when you do, wouldn't it be good to have a clear understanding of what (and who) you're voting for?

"ruling class" (an exaggeration, since they have no actual true legal authority over others)

This ought to take it for "naive statement of the year", I think. Who needs legal authority when you own the banks, media, and think tanks - and, oh yeah, also the legal authorities.

well, I got two bottles of "Sovetskoe" champagne in the fridge, which I hope to drink tomorrow night. One is for Dennis, who probably will squeak by, but may not. And what a little weazel, I read on the wires that he asked Homeland Security to investigate if any federal laws where broken when his main primary challenger visited his office unannounced with a "missing" poster. You fools would go apeshit of Mccain did that, but it's OK for Fruitcake Dennis. And the other's for Obama. I hope he puts Clinton out. I'm pretty sure he'll be a complete disaster, completely incapable of managing the war or the economy or foreign affairs. Man I'll get to laugh my ass off for another eighth years : )

i was liking the idea of "actual true legal authority" meself. yes, yes, let's talk about the immutability of the law and of the equality beneath it.

Harold, I feel your pain, but the neoliberal strategy of dumping another bucket of shit and treacle on top of the usual crackpot realism is not helpful. If you truly believe in Obama as part of the solution, the best thing to do is discourage his anti-progressive actions and leave his vision, whatever that might be, to the care of his therapist.

I dropped back to call BS on this. I saw it coming. It comes every time.

Here's how the formula works. Make the claim that anyone who supports the Democrat over the Republican has some sort of "naive" "illusions" about the "vision" of the Democrats or some such thing.

1) Well, in my case, it's a falsehood. I don't have any particular illusions about Barrack Obama. Nothing in my post remotely suggests that I harbor some sort of illusion. I didn't say the word "vision" at all. Your implication that I did rather grossly misrepresents the tone of my posts.
2) More importantly, it's transparently illogical. Even if I did personally harbor some sort of romantic delusion about Obama, that would not be a logical argument against others supporting him for more rational reasons.
3) There is an overwhelming logical argument for Obama, assuming that he is the Democratic nominee, and that is that, should the Democrat lose, John McCain will be elected president.

As for his anti-progressive actions, well, I agree with you on that point. However, the specific topic of this thread is Penny Pritzker and her role in the campaign. Some good arguments that her involvement with Superior (as a board member) casts doubts on her judgment have been raised but not fully developed. Some irrelevant arguments about her neighborhood and family background have been raised, and seem, unfortunately, to matter more to some posters here. I am not yet convinced that the mere employment of Pritzker is an "anti-progressive action" on Obama's part.

Who is John McCain's finance chair and what is their background?

"ruling class" (an exaggeration, since they have no actual true legal authority over others)

This ought to take it for "naive statement of the year", I think. Who needs legal authority when you own the banks, media, and think tanks - and, oh yeah, also the legal authorities.

You are naive of history, or pretend to be. You do not understand what it means to have a real, overt "ruling class". Or pretend not to.

Of course the US upper socioeconomic class has massive political and economic power. Who denied that? But why not use accurate terminology? Is it really naive to speak accurately?

And now, of course, once again, I give up, with the standard explanation that I bother only for lurkers.

I know that the regulars will cherry pick my posts for mined quotes, make "clever" sarcastic comments, and high five each other long into the night. And of course, try to distort my arguments into straw men. Knock yourselves out.

I've debated whether to comment that most here are from a privileged socio-economic class themselves, just not quite as privileged as Pritzker. I believe I will point that out. Hey, almost all of my friends are from a privileged class too; it's been that way since I went to college. No problem. Yet somehow, I do feel that it is relevant to point this out.

Last post was a bit over the top. Apologies in advance. I don't think the discussion on this thread warranted such a hostile post.

Progressive change is, like all change, a relative thing. I very strongly agree that anything that can encourage Obama or any other politician with an actual realistic chance at power to be more progressive is good.

I don't deny the obvious point that personal wealth and business money going to the Democrats is potentially a double-edged sword. They need money to win, but money from those ensconced in the current status quo can potentially corrupt. This is a very valid point.

I suppose my frustration is with the lack of emphasis on the current situation. Obama is very progressive relative to John McCain, and from my point of view, that really is what matters right now.

I can't even find a definitive name of a campaign finance director for McCain. Media doesn't bother to mention it. It was Mary Kate Johnson, Bush fund raiser and lobbyist, for a while, but she seems to have quit.

harold: no, you don't get to draw a sharp line between hard and soft political power to clean up a candidate's reputation, and then accuse people in this forum of abusing their personal positions of privilege. well, ok, you do, but can you see the contradiction i see?

woops. shoulda refreshed.

harold: Have ya tried calling Nan(1-202-225-0100)? She's a Woman, she's a Democrat, and I hear she's VERY high up in the government.

Obama is very progressive relative to John McCain, and from my point of view, that really is what matters right now.

You know, one of things I really find annoying about American political discussion is that most Americans don't give any thought at all to politics until it's election time, and then, when they are finally paying attention, they assume that every political discussion is aimed towards answering the question: "Who should I vote for?"

How about political discussion that's aimed at figuring out how the world works? Or figuring out how to change the world? To have such a discussion, whether it's about the role of the ultra-rich in our political system, or role of AIPAC in determining our Middle East policy, one must necessarily use real examples, with real people, and when those real people are Democrats, well, you can scarcely finish a thought without hearing "The Republicans are worse!"

Imagine if you were trying to eradicate poverty in our society, but every time you pointed out some particular instance of poverty, you were told, "People in Africa are poorer!" How much progress could you make under those circumstances?

And I think the two most important words in the sentence I quoted above are "right now." Because all that matters is what we can do "right now." If it takes some longer term thinking, where "longer term" means "beyond this November", well, sorry, but we just can't do it.

but obama's supporters want him to help fix the deregulated markets and unfair trade agreements.

which obama will do aon the same day he learns he is able to fly, unaided, between Chicago and Waukegan...that is, nagahapun. Obama is securely in the pockets of the big money interests. They own him, just as they own every other candidate. I'd bet the fucking ranch that re-regulation is just an empty promise.

I'd bet the fucking ranch that re-regulation is just an empty promise.

the ranch is mortgaged, and the mortgage holder's already made your bet for you.

I posted this on Greenwald's blog, I feel it should go here too because this is the source.

Your post on page 15 is extremely easy to debunk.

http://letters.salon.com/opinion/greenwald/2008/03/05/rezko/view/index15.html?show=all

Penny Pritzker resigned as Chairman from the Superior Bank in 1994. Seven years before the company actually went broke. This makes the third claim massively irrelevant.

The main high risk form of securitisation was introduced in the period 1994 to 1995. Prior to that, their securitisation issues were reasonably in keeping with standard practice.

Subprime securitisation started off in the 1970's.

http://www.dallasfed.org/news/ca/2005/05wallstreet_assets.pdf

The Superior Bank only appeared in 1988 - thus the second claim is an outright contemptable lie.

Which leaves the first claim, which is frankly, all negative fluff.

So what this all breaks down to is: Obama cannot choose a eminently qualified woman to serve near him because she once chaired a company that went bankrupt - seven years after her time as chairman.