By <Melissa Harris, Katherine Skiba and Christi Parsons, Chicago Tribune reporters
May 3, 2013
President Barack Obama lauded her skills, several prominent business groups quickly heaped praise and critics remained generally quiet after Chicago business executive Penny Pritzker was introduced Thursday as Obama's nominee to lead the Commerce Department.
But given Washington's divisive political culture, there will no doubt be some battling over Pritzker's confirmation by the Senate, with criticism of the 54-year-old billionaire anticipated from Republicans and Democrats.
Pritzker, a member of Chicago's wealthiest family, was an early supporter of Obama's. She also has taken on labor groups who support Democrats through her school reform work and her seat on the board of Hyatt Hotels Corp., which is locked in a multiyear dispute with a hotel workers union.
If she joins the Cabinet, Pritzker would become the first member of her family to hold a national government position, creating an opportunity for her to burnish an identity apart from the leadership roles she has played within the family's many businesses, most of which were sold in recent years.
With a personal fortune estimated at $1.85 billion, Pritzker is listed by Forbes magazine among the 300 wealthiest Americans. At its peak, the Pritzker empire included a bank, a credit reporting agency, an industrial conglomerate, residential developments from coast to coast and the Hyatt Hotel chain, founded by her uncle Jay.
With the sale or public offering of those assets came an opportunity for Pritzker, who runs an investment firm, to strike out on her own. She played an influential role in Obama's rise from Illinois state senator to the nation's 44th president, serving as Obama's national finance chair in his first campaign for the White House and co-chair of his re-election bid.
In announcing Pritzker's nomination from the Rose Garden, Obama heralded her as "one of the country's most distinguished business leaders" with more than 25 years' experience in real estate, finance and the hospitality industry.
"She's built companies from the ground up," Obama said. "She knows from experience that no government program alone can take the place of a great entrepreneur."
He noted that Thursday was her birthday, saying: "For your birthday present, you get to go through confirmation." That prompted laughter. "It's going to be great."
Obama also said she had "a wonderful family" and had "watched her kids grow up."
"This is what's unique about Penny; her friendship with the president gives her a unique ability as part of the economic team," said Chicagoan Bill Daley, commerce secretary under Bill Clinton and White House chief of staff to Obama. "She'll really be in the room as they're talking through policy. ... Because of that unique relationship, that puts her in a different category than a lot of people who go into the Cabinet."
Next for Pritzker are meetings with senators before a nomination hearing and vote — which could be a bumpy ride.
Sen. Chuck Grassley, R-Iowa, urged a hard look at the topic of offshore tax havens. The Pritzker family has had multiple disputes with the Internal Revenue Service about its overseas tax shelters, established before Penny Pritzker reached adulthood.
Pritzker is likely to be asked about the 2001 failure of Superior Bank, based in Hinsdale, where Pritzker was chairman from 1991 to 1994. Pritzker also handled the matter after her uncle Jay died in 1999. The bank was co-owned by the Pritzker family and aggressively pursued subprime mortgages and car loans.
Superior Bank's failure arguably has become more relevant as time has passed. The bank gave loans to people who couldn't afford to repay them and then sold portions of the notes to investors — a strategy similar to one that contributed to the near-collapse of the nation's economy less than a decade later.
Norman Ornstein, an expert on Congress and resident scholar at the American Enterprise Institute, predicted "some tough, tough questions in the hearing and airing some of the family dirty laundry — the labor disputes, the investments, any of that kind of stuff."
But absent some unknown issue, he said her impressive credentials and the Obama-Pritzker alliance counter much of the criticism. He added: "Commerce is important, but it's not Treasury, it's not Defense — it's not the trophy you would get if you were the opposition, bumping off a nominee."
The White House conducted an in-depth review of Pritzker's background in preparation for the confirmation hearing. Pritzker still must release an ethics statement, outlining what steps she will take to avoid conflicts of interest, such as selling some investments.
"It's just going to be whether or not the Republicans go after her because she's close to the president," Daley said about the most likely challenge.
Still, business groups, including the U.S. Chamber of Commerce, on Thursday welcomed Pritzker, whose personal network, business credentials and family name have served Obama well.
For instance, as soon as financial overhaul legislation cleared Congress, the president set out to repair relationships with business leaders who felt stung by his criticism of Wall Street's "fat-cat bankers." In Chicago, Pritzker convened a group of executives, many of them friends, to meet with Obama while he was in town for Democratic fundraisers. The president even took notes.
"She wanted to make sure he was hearing strong points of view," Byron Trott, founder of Chicago-based BDT Capital Partners and a Republican, told the Tribune in February. Trott, who attended the meeting with the president, later added, "She knows the president, and she's willing to be firm with the president."
Four years ago, Pritzker withdrew from consideration as commerce secretary, citing family obligations. At that time, the peak of the financial crisis, Pritzker was managing a large portion of the family's billions in assets.
Advisers to the president say Obama has wanted to name Pritzker for months now, because of her work in building five companies and work on the president's Council on Jobs and Competitiveness and on the Economic Recovery Advisory Board.
While her friendship with the president will give her instant credibility, she has few to no allies within organized labor. Hyatt has long battled the Unite Here union in Los Angeles, Chicago and elsewhere. And Pritzker, who served on the Chicago Board of Education until she resigned in March, has been harshly criticized by the Chicago Teachers Union. When Pritzker stepped down, a union official said she "has a long and storied history as an anti-labor and anti-worker kind of boss."
The fight with Unite Here has grown intensely personal. The union and its allies have confronted Hyatt board members at their workplaces, reproached Pritzker-backed charities and produced a movie about a then-Pritzker family-owned subsidiary's decision to shut down an East Chicago manufacturing facility and accept millions in tax incentives to move jobs to Louisiana.
Mayor Rahm Emanuel, in a statement, called Pritzker a "champion for our students and our city" who has shown "incredible commitment and leadership in her every business, civic and philanthropic endeavor."
If Pritzker becomes commerce secretary, it remains to be seen how she will adapt to the heightened scrutiny that comes with a Cabinet post and whether she can rebuild an agency that has been without a permanent leader since John Bryson resigned in June 2012, citing medical reasons. The department has a $7.5 billion budget and nearly 47,000 employees worldwide.
Pritzker, at least, is accustomed to numbers of that magnitude.
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