WSJ: Finance chair's ties to failed bank could embarrass Obama campaign RAW STORY

Published: Monday July 21, 2008





Print This Email This Senator Barack Obama's campaign faces a potential controversy over finance chairwoman Penny Pritzker's past association with Superior Bank, which failed and was seized by regulators in 2001. "Billionaire Penny Pritzker helped run Hinsdale, Ill.-based Superior, overseeing her family's 50% ownership stake," John R. Emshwiller writes for The Wall Street Journal. "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 Bank was reportedly worth $2.3 billion at time of its seizure by the Feds. Superior was criticized for engaging in predatory lending. Senator Obama has frequently called for Congressional action against predatory lenders who are at the epicenter of the subprime mortgage crisis. "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," notes The Wall Street Journal. Excerpts from article: #### "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. Ms. Pritzker said her "main role" as chairman was to help clean up past financial problems. "I did not set strategy or policies" on lending or securitization, she said. In 1994, she moved to the board of Superior's holding company. Through the 1990s, Superior reported rising profits and paid $200 million in dividends to its owners, according to a 2002 report by the inspector general of the Federal Deposit Insurance Corporation. But the profits came through "flawed" accounting and masked operating losses, the FDIC report said. The dividend payments were made "without regard to the deteriorating financial and operating condition." Full story can be read at this link.