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Last updated: May 2, 2013 10:35 pm
Barack Obama has nominated as commerce secretary Penny Pritzker, the Chicago businesswoman and heiress to the Hyatt hotel empire who helped finance his rise to the White House.
The choice of Ms Pritzker was announced as Mr Obama rounded out his second-term cabinet appointments on Thursday before a three-day trip to Mexico and Costa Rica.
Mr Obama also tapped Mike Froman, his top adviser on international economic policy, to be US trade representative.
The post of commerce secretary has often been reserved for corporate executives, and US business groups were generally pleased with Ms Pritzker’s selection.
“[She] knows what it takes first-hand to run a business – critical background that will serve her well,’ said Rob Nichols, president of the Financial Services Forum, which represents the largest US banks.
But her appointment could prove controversial across party lines, given her close ties to Mr Obama and her association with Hyatt. This could lead to some tough scrutiny at her confirmation hearing, though it is unlikely to scupper her nomination.
Some of Mr Obama’s Democratic allies could seize on clashes between Hyatt, where she serves on the board, and trade unions. One former senior US union official said she could suffer from “collateral damage” to the battles between labour and other members of the Pritzker family, even if she was not directly involved.
Meanwhile, others could attack her selection as political cronyism since she has been one of Mr Obama’s top fundraisers and served as national finance chair of his 2008 White House run. Earlier this week, Mr Obama appointed another top fundraiser, Tom Wheeler, a former lobbyist for the cable and wireless sector, to be chairman of the Federal Communications Commission.
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In a statement, the Republican National Committee on Thursday said Ms Pritzker – whose estimated net worth is $1.85bn – was “another political ally with a history of controversial business practices.” It pointed to the case of Superior Bank, a small lender co-owned by the Pritzker family that collapsed in 2001 under a series of excessively risky car loans and mortgages.
From the Rose Garden on Thursday, Mr Obama called Ms Pritzker “one of our country’s most distinguished business leaders”, adding that her career over two and a half decades spanned real estate, finance and hospitality.
“She’s built companies from the ground up. She knows from experience that no government program alone can take the place of a great entrepreneur,” Mr Obama said.
On Capitol Hill, John Thune of South Dakota, the top Republican on the Senate commerce committee, which will weigh her nomination, was cautious. “I look forward to learning more about Ms Pritzker’s background and meeting with her,” he said. “Americans continue to suffer from weak economic growth and persistent, high unemployment, and I am anxious to hear her thoughts on how the Commerce Department can better work to address those and other issues,” he said. Chuck Grassley, the Iowa Republican senator, said her “tax history” deserved a look, charging that Ms Pritzker was “associated with the kind of tax avoidance activity that the president dismisses as fat cat shenanigans for others”.
Mr Froman’s nomination is less contentious, though he has also known Mr Obama for many years. They went to Harvard Law School together and Mr Froman, who later worked at Citigroup, first introduced Mr Obama to Bob Rubin, the former treasury secretary, at the time of his Senate run in 2004.
In his current post, Mr Froman has been charged with co-ordinating the White House’s international economic policy efforts – including advising Mr Obama on big international summits such as the G20. As USTR, Mr Froman will spearhead an ambitious trade agenda that he is already familiar with, including the signing of a trans-Pacific Partnership with Japan and other countries and a sweeping trade agreement with the European Union.
”He has won the respect of our trading partners around the world. He has also won a reputation as being an extraordinarily tough negotiator while doing it,” Mr Obama said of Mr Froman in his White House statement.
Mr Froman’s selection came after months of uncertainty over the USTR pick. Earlier in the year, he had appeared to rule himself out of the job, and Mr Obama seemed inclined to choose Jeff Zients, then acting budget director, as his top trade official. But after both Democrats and Republicans on Capitol Hill balked at Mr Zients, Mr Froman was back in the picture.
Mr Froman’s appointment was applauded by business groups and on Capitol Hill. “The president has committed to a bold new trade agenda, and Michael Froman has the vision and experience to deliver new trade opportunities for American workers and companies at the negotiating table,” said Tom Donohue, president of the US Chamber of Commerce.
“I am confident that his skills and experience will stand him in good stead as he leads the administration’s trade policy and takes the helm at one of the most professional and productive agencies in the US government,” said Dave Camp, the Republican chairman of the ways and means committee, which has jurisdiction over trade.
Chicago family known for philanthropy and feuds
By Neil Munshi in Chicago
The Pritzker family’s stamp is all over Chicago, the city in which Nicholas Pritzker arrived in 1881, after his family left the Jewish ghetto near Kiev.
Their philanthropic contributions have built museum wings, the University of Chicago’s school of medicine, and the Frank Gehry-designed pavilion at the city’s showcase Millennium Park. But their recent history has also been marked by family feuds, clashes with unions, and a high-profile bank collapse.
The 10 Pritzkers on the latest Forbes billionaires list have a total net worth of $22bn, but they are no longer unified in the same way the previous generation of the family was.
Penny Pritzker’s younger brothers JB and Anthony run the Pritzker Group, a tech-focused venture capital firm. JB backed Hillary Clinton’s 2008 presidential bid, but later joined with his sister in backing Barack Obama, acting as a bridge between the two camps.
Tom, her cousin, is chairman of Hyatt Hotels, while other cousins have pursued movie production and music.
The Pritzker family’s vast empire has been broken up in the years since a lawsuit brought by two younger cousins.
In 2002, Liesel Pritzker, then a student at Columbia University, and her 22-year-old brother, Matthew, sued their father, Robert, and 11 older cousins, including Penny Pritzker, for allegedly mishandling their inheritance. The pair settled the matter three years later for about $450m each, setting the stage for the break-up of the family’s holdings.
After an agreement was reached to break up the then more than $15bn empire by 2011, Berkshire Hathaway bought the majority of the family’s Marmon Group, an industrial conglomerate that, along with the Hyatt hotels group, was a pillar of the family’s wealth.
In 2009, the Hyatt group, long closely held by the Pritzkers, was taken public, raising $950m. Two yeas later, Goldman Sachs led a buyout of TransUnion LLC, the credit-reporting agency that Ms Pritzker led – another former asset likely to come under scrutiny during her confirmation – in a deal valuing the family’s stake at $1.5bn.
Ms Pritzker may face scrutiny over the 2001 collapse of Superior Bank, the suburban Chicago bank in which the family-owned a 50 per cent stake and Ms Pritzker served as chair from 1991 to 1994 whose subprime lending model was an early example of the strategies that led to the global financial crisis.
In 2011, the family paid off the last of the $460m it agreed to pay the Federal Deposit Insurance Corporation as part of a settlement in which it admitted no wrongdoing, though an audit by the agency found that its failure was “directly attributable” to excessive concentrations in subprime lending.
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