Leading Republican says billionaire 'did well' in hearing despite concerns over offshore tax haven and failed bank
A Chicago billionaire, Penny Pritzker, appeared on her way to becoming US commerce secretary on Thursday, after a top Republican said she had satisfactorily answered most of his questions about her role in the failure of an Illinois bank and her family's use of an offshore tax haven.
"I can't see that there is anything that would keep her from getting through the process in pretty good shape," said Senator John Thune of South Dakota, the top Republican on the Senate commerce committee, after a hearing on her nomination. "I thought she did well today," Thune said, adding he had a few more questions he wanted Pritzker to answer in writing.
Pritzker, who is the 271st richest American, according to Forbes magazine, was President Barack Obama's national finance chairman in 2008 and his campaign co-chair in 2012. Her personal fortune is worth an estimated $1.85bn, putting her at the pinnacle of the top 1% of American households.
A 184-page financial disclosure form released by the White House showed that she received $54m in consulting fees from the Canadian Imperial Bank of Commerce Trust Co, which manages an offshore trust for the Pritzker family in the Bahamas. Some Republicans say it is hypocritical of Obama to nominate cabinet members who benefit from offshore tax havens when he has criticized that practice by others.
Pritzker said the trust was set up when she "was a little girl" and that she has asked the current trustee "to remove themselves and appoint a US trustee".
The Stanford University-trained lawyer and businesswoman is on the board of the Hyatt Hotels Corp, which her uncle, Jay Pritzker, founded in 1957, two years before she was born. She plans to leave that position if her appointment as commerce secretary is confirmed. In her prepared testimony, Pritzker highlighted the entrepreneurial success of her family, which she said began when her great-grandfather "came to the United States from Czarist Russia, dirt poor, at the age of 10. He taught himself English, worked several jobs, earned his law degree at night, and opened a law practice at the age of 30." She told the panel that after her father died when she was 13, she asked her grandfather if she could be trained in the family business.
About 30 members of the Unite Here hotel workers' union attended the hearing, to show their disapproval of the nomination. The union has called Hyatt "the worst hotel employer in America", because of its treatment of workers, failure to reach a new labor contract and opposition to allowing workers at additional Hyatt hotels into the union.
"Today, we send a message to President Barack Obama that Penny Pritzker is not a good choice. She doesn't see people like human beings. [She sees people] like slaves," said Wanda Rosario, one of 100 housekeepers fired by Hyatt in Boston in 2009, as a cost-cutting move. "It was my dream to retire from Hyatt, but they broke it," she said.
Pritzker served on Obama's fundraising committee during his successful 2004 run for the Senate and was national finance chairman for his 2008 presidential campaign, which raised nearly $750m, breaking a record. During the 2008 presidential campaign, Republicans attempted to tar Pritzker with the failure of Superior Bank, which in the 1990s was a pioneer in the subprime mortgages that a decade later were blamed for the global financial crisis. Regulators closed the bank in July 2001, after auditors concluded that income from the mortgage securizations had been overstated. Five months later, the Pritzkers agreed to pay the Federal Deposit Insurance Corporation (FDIC) $460m over 15 years, as part of a deal in which the family and the other half-owner admitted no liability.
Pritzker said she was chairman of the bank from 1991 to 1994, but never played an active role in its management. "I stepped down as the chairman of the bank … seven years before the bank failed," Pritzker said. After the bank got into trouble with regulators, she said, "I stepped in on behalf of the 50% ownership of my family to try to salvage the situation."
"Unfortunately those negotiations failed and the bank failed," Pritzker said.
The voluntary settlement with the FDIC "was the right thing for us to do, both for the depositors and for us as a family", Pritzker said.