In the last week, President Obama announced three critical appointments tarnished by banking scandals, bailouts, lobbying and bundling. Penny Pritzker, a billionaire heiress embroiled in banking failure and labor abuse, was named to head Commerce. Michael Froman, a managing director at Citigroup during its collapse and bailout, was appointed to take on the job of U.S. Trade Representative. And Tom Wheeler, venture capitalist and former communications-industry lobbyist, has been named to chair the Federal Communications Commission.
The appointments exemplify the corporate-government revolving door, political payback for fundraisers, and the domination of big business over our democracy. Once again, Obama has given everyday Americans good reason to groan about the government we’ve got, and to demand the better government we deserve.
To head the Commerce Department, Obama appointed Penny Pritzker. Pritzker has been a long-time funder of President Obama’s political career. Open Secrets reports that in 2012 she bundled at least $500,000 for Obama’s re-election campaign, and that in 2008, she raised up to that amount. Pritzker is among the 300 wealthiest Americans according to Forbes magazine, with a fortune estimated at $1.85 billion.
Her wealth comes from the Pritzker family’s ownership of Hyatt Hotels, known for exploiting its workers. Some examples: In Boston, Hyatt fired its entire housekeeping staff and replaced them with temporary workers earning minimum wage. In Baltimore, only 9 of the 30-40 housekeepers working at the Hyatt Regency are full-time and directly employed by Hyatt. The rest are subcontracted temp workers earning minimum wage.
In addition to unfair treatment of workers, Pritzker’s track record as owner and chair of the failed Superior Bank in Chicago should disqualify her from the role of Commerce Secretary, by any common sense standard. As investigative reporter Dennis Bernstein put it, “if you traced today’s sub-prime crisis back to its origins, you would come upon the role of the Pritzkers and Superior Bank of Chicago….[Their] pioneering work… helped set the stage for the current sub-prime meltdown.”
Pritzker’s management of Superior Bank was also “tainted with the hallmarks of a mini-Enron scandal” according to business writer David Moberg in a 2002 In These Times article. “Using a variety of shell companies and complex financial gimmicks, Superior’s managers and owners exaggerated the profits and financial soundness of the bank.… Many individuals—disproportionately low-income and minority borrowers with spotty credit records—had apparently been exploited through predatory-lending techniques, including exorbitant fees, inadequate disclosure and high interest rates.” These concerns about Pritzker were voiced in government investigative reports and consumer complaints, including a RICO class action suit for over 1,400 depositors, who initially lost over $50 million of their life savings. In 2001, Pritzker’s Superior Bank was taken over by Federal Regulators and then closed. This occurred with the requirement that the owners pay $435 million, as well as harsh criticism of Superior’s promotion of sub-prime mortgages.
As a plutocrat with a history of banking scandal and labor abuse, Pritzker will do nothing to correct the imbalance in the economy between workers and owners and nothing to shrink the wealth divide.
We urgently need a forward looking Secretary of Commerce who will work toward a new economy that serves working people, not just the wealthy. Such an economy must encourage local, community-based small businesses and cooperatives. Local enterprises recirculate wealth and make every dollar worth more, (the so-called “multiplier effect”). Employee ownership ensures that the wealth generated by workers is shared, not sent to the top. See for example the work of members of the Green Shadow Cabinet, including our Secretary of Commerce, Marc Armstrong, our Secretary of the Treasury, Ellen Brown, our New Economy Advisor, Gar Alperovitz and our Chair of the Council of Economic Advisers, Richard Wolff.
Obama has appointed Michael Froman – a former managing director at Citigroup and major bundler in Obama’s first campaign - to take on the critically important job of U.S. Trade Representative. The job is particularly important right now as the administration completes negotiations for a global corporate coup, the Trans-Pacific Partnership, which will greatly empower big banks like Citigroup.
In addition to being a managing director at Citigroup from 1999-2009, Froman was President and CEO of CitiInsurance. Froman’s tenure coincided with the economic collapse caused by the subprime mortgage crisis and casino investing of the big banks in derivatives. During his tenure, Citigroup went insolvent and received federal government bailout with a $20 billion investment and $306 billion loan guarantee in November, 2008. With this dubious achievement behind him, Froman departed to join Obama’s transition team. Citigroup’s failure of a 2012 federal stress test suggests it’s not out of the woods yet.
We need a trade representative like the Green Shadow Cabinet’s appointment, economist Richard McIntyre. McIntyre would put protection of the people and planet before profit; and recognize the dangers of the big banks, not empower them further. Froman is exactly the wrong choice for this position as his instincts continue the neo-liberal approach of unregulated big finance that puts privatization and profits for transnational corporations first.
In his third appointment, Obama has named a faithful bundler-lobbyist, Tom Wheeler, to become the chair of the FCC. Wheeler raised between $200,000-500,000 in 2008 and in 2012 raised $500,000. Wheeler lobbied for the communications industry serving for 13 years as president of the National Cable Television Association and as former CEO of Cellular Telecom and Internet Association where he served 12 years. Since 2005 he has been a venture capitalist with Core Capital Partners where he served as managing director when he was appointed.
As Reuters reports, “All of the senators in the Commerce Committee know Tom as a lobbyist who funnels funds to them, not as a stand-up guy from a regulatory agency who is able to take heat.” The FCC agenda should be making rural broadband a reality, providing broadband access throughout urban areas especially among low-income communities, lowering the costs of cable with fair billing and ensuring net neutrality. This is a time when competition, not consolidation and mergers are needed. A long-time industry lobbyist and venture capitalist will not provide the type of leadership the people need.
The concentration of the communications industry is a central problem in the U.S.. We need an FCC that will break up the few big business interests that dominate communication. Wheeler has supported more concentration, supporting the merger of AT&T with T-Mobile which was fortunately stopped by a lawsuit filed by the Federal Trade Commission. Essentially, Obama has put in place someone from the industry that the FCC is supposed to regulate. The appointment makes clear that the Foxes are in charge of the Hen House.
In November, 2007 President Obama said: “I am in this race to tell the corporate lobbyists in Washington that their days of setting the agenda are over”. But his appointments of big business interests to key cabinet posts throughout his presidency, have created one of the most big business centric administrations in history – at the cost of consumers, small businesses and the overall economy.
In short, President Obama’s Cabinet appointments are re-enforcing the stranglehold of the economic elite over our economy and democracy. As the bipartisan establishment in Washington continues to sell out the American people, there is no question that a new government is necessary.