The American Spectator

Special Report

Obama in the Tank for Pritzker

By Edward Sisson on 9.26.08 @ 12:09AM

(Page 2 of 4)

A LARGE COLLECTION of documents exposing highly significant parts of the story is open to anyone who walks in off the street, set out in the case files of

Coast-to-Coast, in the clerk's office of the United States Court of Federal Claims in Washington. The case was one of 120 similar breach-of-contract cases called "Winstar-Related Cases" arising out of the legislation adopted to resolve the last great banking crisis, of the 1980s. And the case was one of the cases my law firm and I were involved in, until it was thrown into a cocked hat by the bank's massive failure, when the FDIC stepped in and took over representation of the bank, leaving me representing just the holding company, Coast.

The United States Department of Justice turned all its energies to proving how the owners and managers destroyed the bank. We were unable to defend the management misconduct. All we could do was argue that Coast was entitled to get a recovery anyway. Of course, we lost. The case ended four years ago, along with all my past connections to the company. I haven't thought about the case in years.

But when this current banking crisis blew-up a couple of weeks ago, I saw that the press was doing nothing to investigate the bank failure involving such a close Obama associate. Like a detective in the TV series Cold Case, I recognized that this "cold case file" had to be re-opened and shown to the American people.

I went back to the clerk's office on Friday, Sept. 19, 2008. The key United States Department of Justice expert reports and sworn depositions were all there, and have been sitting there, free for anyone to read and copy, for more than four years. I re-read them, copied some of the key reports and depositions, took the copies home, scanned them, and posted them on-line where you can read and download them here.

THE ENORMOUSLY WEALTHY and powerful Pritzker family acquired the bank late 1988 when it was Lyons Savings of Hinsdale, Illinois (termed "Old Lyons"). Superior Bank and its holding company, Coast-to-Coast, became part of the vast empire of 1,500 Pritzker-controlled companies, trusts, partnerships, and other entities, worth about $15 billion in 2003, that comprise the Pritzker "family business unit" (FBU). In 2003, Pritzker lieutenant Glen Miller (one of the four people who ran the Pritzker family business unit) testified that the Pritzker family acquired Superior and Coast "in the interests of developing a financial services business that would house ultimately vertically and horizontally-integrated businesses: banking, mortgage, auto leasing, auto lending, etc., as it would grow." Superior and Coast were "entities within the FBU that posed a unique opportunity to do [in]vesting in the most tax efficient way" by taking the losses of Old Lyons and using them to shelter the profits of other Pritzker family investments from tax.

Penny Pritzker was on the board of directors of the bank through much of its existence, and on the board of the bank's 100% holding company, Coast-to-Coast, throughout the collapse of the bank.

Under Pritzker's leadership on the board of the bank, the bank was wholly unable in 1989-1992 to succeed at the traditional business of safe loans. To increase profits, Pritzker and the board decided to move the bank into the risky field of subprime lending. Bill Bracken, chief financial officer of the bank, confirmed under oath that "Superior Bank become associated with the sub-prime lending business...with the combination of Alliance [a subprime mortgage generation firm] and Superior in 1992."

Penny Pritzker took the lead in convincing the regulators to allow the bank to get into this risky business. Bracken was present at a key meeting with regulators in late 1992:

A: I believe there was one meeting where I was involved. There were several board members, senior management from both companies, to explain to regulators how we saw the marriage taking place and the benefits of it. ...

Q: Was Penny Pritzker there?

A: I think so. I think she was. ...

Q: Just getting back to that meeting with the OTS...how do you recall the meeting proceeding? Did someone make a presentation and the regulators sat there and listened?

A: It was obvious to me that there had been a previous discussion when we walked into the room because it was -- a booklet was handed out. Somebody -- I'm trying to think who gave the presentation. I think Penny actually gave the presentation.

Q: Ms. Pritzker?

Letter to the Editor

topics:
Health Care, Barack Obama, Business, Law, NATO