We Americans dwell in a consumer plutocracy, and the plutocrats don't even bother to be cute about it any more. Barack Obama, hailed by the geniuses of new media as a populist saviour, has surrounded himself with a team that was already bought and paid for by the financial services industry before they ever walked into the White House.
"And just in case you ever get a big job in Washington, Larry, remember who your friends are!"
George W. Bush remembered his friends who paid him $15 million on a $600K investment in a baseball franchise, and Barack Obama remembers his friend Penny Pritzker, the Queen of Sub-Prime Lending, chief financial officer of his Senate and Presidential campaigns, and Rahm Emanuel remembers his friends among the investment bankers at Wasserstein Perella, who paid him $16.2 million for two years of "work," and it isn't easy to figure out exactly what "work" that was, because Rahm Emanuel was a speech and communication major at Sarah Lawrence and Northwestern, and never had any training whatsoever in accounting, or business, or finance... but he always knew how to follow the money, as a fundraiser for Richard Daley and Bill Clinton, and now Rahm has followed the money all the way to his current job as Chief of Staff and gatekeeper outside the Oval Office.
"If you ever get a big job in Washington, Rahm, remember your friends!"
And the friends remember, too. They remembered Bill Clinton for signing Gramm-Leach-Bliley, and paid him $40 million for speaking, in 2007, alone, and the same friends already remember Tim Geithner.
Tim Geithner is "[a] very unusually talented young man...[who] understands government and understands markets," says Henry Paulson, who gave away more money to the banks than anybody in the history of the world... except Tim Geithner, Larry Summers, Rahm Emanuel, and Barack Obama.
When Penny Pritzker withdrew her name from consideration for Secretary of Commerce, a typical corporate news report in the New York Times was neutral, to say the least.
"Penny Pritzker, a Chicago hotel magnate whose business transactions could have provoked scrutiny, last week said she did not want to be Commerce Secretary."
One of Penny Pritzker's transactions that "could have provoked scrutiny" was paying herself and her co-conspirators $200 million in dividends on phony profits while they diddled away all the depositors' money deposited in Superior Bank.
This enormous scam never provoked much scrutiny while Penny Pritzker was bankrolling Barack Obama's Senate campaign, and it never provoked much scrutiny while she was the financial chair-person of Barack Obama's Presidential campaign, and it isn't provoking much scrutiny now that President Obama has appointed Penny Pritzker to the President's Economic Recovery Advisory Board, but nominations for Mr. Obama's Cabinet must be especially provocative, because apparently nothing else was ever going to provoke much scrutiny of Penny Pritzker except being nominated as Secretary of Commerce.
The only significant "accomplishments" in Penny Pritzker's hugely over-privileged life are bankrolling Obama and cheating hundreds of elderly retirees out everything in their bank accounts that wasn't covered by the FDIC, so...
Which one of these "accomplishments" qualified Penny Pritzker to be Secretary of Commerce, or a member of the President's Economic Recovery Advisory Board?
Was it cheating depositors, or bankrolling Obama?
And Penny Pritzker isn't just an ordinary skank among the skanky multitude of bankers who bankrupted the American economy!
It isn't just her shameless shilling for sub-prime mortgages in May 2001: We will "once again restore Superior's leadership position in subprime lending." Two months later Superior Bank ceased to exist, and all the money anyone had deposited in it was gone.
The Pritzkers squeezed hundreds of millions of dollars out of Superior, and then bought their way out of criminal charges with a partial repayment to the FDIC (this option isn't available to the average hold-up man), and even that isn't what reeks about Penny Pritzker.
Penny Pritzker is a big stinking kahuna even among all the other certifiable "Butt-Hole Surfers of American Banking," because Penny Pritzker's version of sub-prime scamming was exceptionally nasty, and targeted an especially vulnerable clientele.
For a while it looked like the only two guys in Washington who wanted to flush another $350 billion down the unaccountable black hole of Hank Paulson's discretion were George W. Bush and Barack Obama.
President George W. Bush's (decided) Monday to act on Obama's behalf and ask Congress for access to the remaining $350 billion of the money Congress authorized to rescue the nation's financial sector.
What a beautiful bipartisan moment!
Meanwhile Democrats were promising to make the next $350 billion give-away much more transparent than the previous $350 billion give-away, which means about as much as saying that a peanut is much more massive than a subatomic particle.
What else could you do with a grand total of $700 billion, except give it away to the same sub-prime speculators who destroyed the American economy?
Well, since sub-prime mortgages comprise less than 7% of all mortgages in the United States, meaning 7% of $10 trillion, meaning $700 billion...
You could pay off all the sub-prime mortgages in the United States for the same amount of money that Bush/Obama are disappearing into an (almost) unaccountable give-away to financial speculators.
So why is it so much more bipartisan to give away $700 billion to financial speculators instead of (for example) erasing all the mortages that made this huge mess?
When Penny Pritzker withdrew her name from consideration for Secretary of Commerce, a typical corporate news report in the New York Times was neutral, to say the least.
"Penny Pritzker, a Chicago hotel magnate whose business transactions could have provoked scrutiny, last week said she did not want to be Commerce Secretary."
One of Penny Pritzker's transactions that "could have provoked scrutiny" was paying herself and her co-conspirators $200 million in dividends on phony profits while they diddled away all the depositors' money deposited in Superior Bank.
This enormous scam never provoked much scrutiny while Penny Pritzker was bankrolling Barack Obama's Senate campaign, and it never provoked much scrutiny while she was the financial chair-person of Barack Obama's Presidential campaign, but nominations for Mr. Obama's Cabinet must be especially provocative, because apparently nothing else was ever going to provoke much scrutiny of Penny Pritzker except being nominated as Secretary of Commerce.
The only significant "accomplishments" in Penny Pritzker's hugely over-privileged life are bankrolling Obama and cheating hundreds of elderly retirees out of the part of their life-savings that wasn't covered by the FDIC, so...
Which one of these "accomplishments" qualified Penny Pritzker to be Secretary of Commerce?
Was it cheating depositors, or bankrolling Obama?
Otherwise there's not much in Penny Pritzker's résumé except appointments to run parts of the family empire that she controls along with five or six uncles and cousins.
So Obama's operatives leaked Pritzker's name as a potential Secretary of Commerce, and the New York Times distinguished itself from ordinary corporate news machines by actually including a paragraph about Superior Bank way down below the jump in a story about Penny Pritzker refusing the nomination for Secretary of Commerce, but even the Times only mentioned this ugly story after a few bloggers had taken the trouble to google "Penny Pritzker" and blogged about her gigantic scam.
Consequently Barack Obama couldn't actualize his plan to pay off Penny Pritzker for all her long years of fundraising and personal donations...
Or maybe you think it really was bankrupting Superior Bank that put Penny Pritzker's name on the short list of candidates for Secretary of Commerce.
Meanwhile Rod Blagojevich tried to get some consideration for appointing one candidate or another to the US Senate, and judging from the strategic leaks coming out of Patrick Fitzgerald's office, they don't really have Blagojevich soliciting bribes on the wiretaps, and he certainly never asked for anything approaching the $200 million that Penny Pritzker paid herself and her co-conspirators in dividends on phony profits at Superior Bank.
But for some strange reason, Rod Blagojevich is big news, and Penny Pritzker isn't.
The US financial system melted down in September, and Congress donated $700 billion to the banks in a useless bail-out.
Meanwhile, Barack Obama was very, very quiet.
"Me too," he whispered, to whatever the Congressional banking lobby dreamed up, and considering that he was the Democratic nominee for President of the United States, and already a world-historical figure in his own mind, it's hard to understand all that silence about the greatest financial disaster since the Great Depression.
Why was Barack Obama so quiet about the gigantic bail-out?
The answer is Penny Pritzker, Obama's crooked muse, and sometimes she inspires him with psychologically invasive but meaningless slogans (by hiring the finest handlers and speechwriters that $2.8 billion can buy) and sometimes she inspires him with silence.
Way back in 2002, Barack Obama was a nobody, a mediocre state senator who had been crushed in a Democratic primary for the House of Representatives, crushed 2-to-1 by Bobby Rush, and if you get crushed by Bobby Rush in 2000, how do you suddenly develop enough momentum to get yourself elected to the US Senate in 2004?
The answer was Penny Pritzker and her humongous fortune, hundreds of millions of dollars of it extracted from deposits in Superior Bank, where elderly depositors discovered that their life-savings had disappeared into worthless sub-prime repackages, while Penny Pritzker had been paying herself and her co-conspirators hundreds of millions of dollars in dividends on phony profits.
Penny Pritzker and her co-conspirators walked away from Superior Bank with a net profit of $343 million, while the FDIC paid out $500 million in bank insurance to depositors up to the limit of $100 thousand per account, and anything beyond that was just gone.
How did Penny Pritzker get away with this monstrous scam?
Nobody knows, and nobody wants to know.
The FBI didn't investigate, the newspapers ran a few little articles on page 843, and Penny Pritzker adopted a nobody state senator from the South Side of Chicago, wrote him a blank check, hired an all-star team of handlers and speech-writers, and now bankers and real-estate speculators like Penny Pritzker have a reliable little friend at the top of the food chain.
"I'll turn you into a Senator, you nobody, and keep pouring on the millions until you get all the way to the White House, but in return..."
"You keep your big mouth shut about the biggest payoff in the history of the world."
In the comments on my previous blog about Obama's muse and main backer Penny Pritzker, that "big stinking kahuna among the certifiable "Butt-Hole Surfers of Ameriican banking," a nasty commenter who knows just enough about banking to spell eff-dee-eye-see impugned my summary of the facts about the FDIC settlement with depositors in Penny Pritzker's failed Superior Bank.
Unfortunately, the annoying commenter was right and I was wrong.
The settlement negotiated between Pritzker and the FDIC was unimaginably worse than I had assumed it was, based on common sense extrapolation from reports in the New York Times and elsewhere.
I assumed that depositors (who lost more than the limit of federal bank insurance) would receive at least a dribble of the money recovered by legal action against the owners of Superior Bank and the giant accounting corporation that failed to detect so much sub-prime skullduggery before Pritzker and her friends had totally emptied the vaults.
I was so wrong, but it wasn't easy to figure out how wrong I was.
There wasn't enough substance in the few newspaper reports about this gigantic bank robbery to understand more about it than a vague outline. Courthouse reporters are usually among the first victims of newspaper downsizing, and general-assignment reporters can't even find the relevant federal court filings, much less understand those typically huge documents, and neither can I.
This would have been a dead-end except for the incredibly lucky circumstance that a professor of business law at Loyola in Chicago, Christian A. Johnson, wrote an full-tilt academic survey of the Pritzker-FDIC deal, which is available online here.
And so I learned yet another miserable truth about Barack Obama and his closest friends.
The FDIC sued the humongous accounting company Ernst & Young for the humongous sum of $2 billion, and promised to share $500 million of it with...
Guess who?
Was it the retirees who deposited their life-savings in Superior Bank, and lost everything beyond the $100,000 limit of FDIC insurance?
Was it the Superior Bank's creditors, who got stiffed when Superior Bank went bankrupt?
Or was it Penny Pritzker and her partners, the same mob that diddled away Superior's assets on worthless sub-prime repackaging while paying themselves $200 million in dividends on phony priofits?
Yes indeedy! The FDIC promised to pay Penny Pritzker and her pals $500 million out of their settlement with Ernst & Young!
"In the event that the FDIC recovered two billion dollars, the Pritzkers and the Dwormans would have been entitled to a payment of approximately $500 million under their settlement agreement with the FDIC."
Flush your depositors money down the sub-prime toilet, pay yourself quadruple what you paid for the bank in dividends on phony profits, and then...
Buy your way out of jail and collect $500 million!
Some elderly depositors with their life savings at Superior lost more than half their retirement nest-eggs in Penny Pritzker sub-prime wheeling and dealing, and how much did the FDIC offer them out of the Ernst & Young bonanza?
Nothing.
Unfortunately for the Pritzkers, the FDIC's suit against Ernst & Young was thrown out of court, along with the depositors' suit against the Pritzkers, and the final score is...
For the Pritzkers and their partners in sub-prime repackaging, the Dwormans:
$42 million purchase price of Superior Bank and...
$460 million to be paid to the FDIC over 15 years.
Net profit for the Pritzkers and Dwormans for bankrupting Superior Bank:
$343 million!
$343 million net profitfor diddling away all the deposits in the bank on worthless sub-prime repackaging while paying yourself $200 million in dividends on phony profits!
$343 million net profit for cheating elderly depositors out of half their life savings!
And that's without the $500 million that the FDIC promised to pay the Pritzkers and Dwormans if they won their suit against Ernst & Young!
Professor Johnson asks a very reasonable question about this beautiful deal with the owners of Superior Bank: "Did the FDIC act unjustly or unfairly to other depositors and creditors when it gave preferential treatment to its wealthy stockholders?"
Almost all American bankers stink, but among the certifiable "Butt-Hole Surfers of American Banking," Penny Pritzker is a big stinking kahuna, and Barack Obama is the gidget she created.
It isn't just the failure of Superior Bank that endows Penny Pritzker with her particular stench. Others bankers have thrown away all their depositors money on worthless paper while paying themselves $200 million in dividends.
It isn't just her shameless shilling for sub-prime mortgages in May 2001: We will "once again restore Superior's leadership position in subprime lending." Two months later Superior Bank ceased to exist, and all the money anyone had deposited in it was gone.
The Pritzkers squeezed hundreds of millions of dollars out of Superior, and then bought their way out of criminal charges with a partial repayment to the FDIC (this option isn't available to the average hold-up man), and even that isn't what reeks about Penny Pritzker.
It's the terms of this miserable settlement that make it especially scummy even for a typical American banker, because the Pritzkers got 15 years to make their partial repayment of $460 million.
This is just plain ugly, because a lot of the people who are waiting for that partial repayment are working-class retirees who had trusted Superior Bank with their life savings, and whatever wasn't covered by the FDIC was gone.
So if you were a seventy-year-old retired plumber, and your retirement savings amounted to $210 thousand, you have to wait 15 years to get most of it back from the gang that threw it away, because...
Why?
Because paying out 3% of their fortune would break the Pritzkers?
Not exactly.
And that's what stinks about Penny Pritzker, outstandingly even among American bankers: It's making those poor old chumps who trusted your bank wait 15 years to recover their money, so they almost go broke again and again and again, like a detainee almost drowning on a waterboard, and then a little money finally leaks in from the almighty Pritzkers.
It actually gets worse, because repaying all the money lost from retirement accounts would only cost $10 million, not even 1/10th of 1% of the Pritzker fortune.
The Pritzkers agreed in 2001 to pay the F.D.I.C. $460 million over 15 years to cover claims by depositors. Still, more than 1,400 depositors who had more than $100,000 in their savings accounts - the maximum the government then insured - were left short about $10 million, said Clint Krislov, a lawyer for several of them. "Why the Pritzkers wouldn't do the right thing and just make these people whole for the small amount of money that it would take, I still cannot understand," he said.
So Penny Pritzker wasn't in jail in 2002, and she was just as rich as ever, and what's a girl to do with so much money that not even a Pritzker can spend it?
In 2002 Barack Obama was almost nobody, an Illinois state senator who had been crushed in a primary challenge to the Democratic incumbent in Illinois 1st Congressional District, Bobby Rush. His only notable foray into financial regulation was supporting a minor initiative by Republican Governor George Ryan, who now languishes in federal prison after being convicted on 18 charges of racketeering.
Following the lead of a racketeer doesn't exactly make you a star in the field of financial regulation, but Barack Obama's follow-the-Republican-leader approach to controlling out-of-control banks turned out to be a very good thing for Barack Obama.
It made him a product that David Axelrod could sell to Penny Pritzker, and Pritzker's money infused the formerly anemic state senator with so many Presidential qualities that only two years later he was... Barack Obama, Man of Destiny!
But except for access to Penny Pritzker's money, what else changed about Barack Obama between 2002 and 2004?
Did Obama's brilliant or useless career (opinions vary) in the Illinois State Senate suddenly become astoundingly more brilliant between 2002 and 2004 than it was from 1997 to 2002?
Not so anybody noticed.
Did Obama suddenly acquire charisma in 2002? Was a sudden, mysterious onset of charisma that nobody noticed in 2000 the difference between getting crushed in a Democratic Congressional primary and winning a seat in the US Senate?
Or was it the money?
In 2004, unlike 2000, Barack Obama had access to Penny Pritzker's virtually infinite mountain of money, enough money for David Axelrod to overwhelm all other Democratic candidates with a humongous onslaught of slick TV advertising, and Brand Obama was born. The rest is about to be history.
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