Funny Money, Obama-dollars and Spoils!
"To top it off, now that Pritzker has been nominated to the Commerce department, while the Times along with other papers around the country find themselves having to cover Pritzker’s failed bank deal, they are incorrectly reporting the Pritzkers paid back $460 million."
PRITZKER'S BANK FAILURE: INVESTORS GOT PAID, DEPOSITORS AND TAXPAYERS FLEECED
7 May 2013,
By her own admission in a 2008 Q & A with the New York Times, Secretary of Commerce nominee Penny Pritzker acknowledged as many as 1600 depositors lost $6000 on average--or roughly $10 million overall--due to her family’s Superior Bank failure. The losses were the result of years of subprime lending and overvaluing its residual interests after failing to discount to present values, future cash flows that were subject to credit losses.
According to the U.S. General Accounting Office:
Superior Bank did not properly value the residual interest assets it reported on its financial statements. Since those assets represented payments that were to be received in the future only after credit losses were reimbursed, they needed to be discounted at an appropriate risk adjusted rate, in order to recognize that a promise to pay in the future was worth less than a current payment…
The result was that Superior Bank reported assets, earnings, and capital that were far in excess of their true values…When Superior finally applied the appropriate valuation techniques and related accounting to the residual interests in early 2001, at the urging of the OTS (Office of Thrift Supervision), Superior was forced to take a write off against its capital and became “significantly undercapitalized.”
The Pritzkers purchased Superior Bank (formerly the failed Lyons Savings Bank), with a New York real estate developer, Alvin Dwarman in 1988 from the federal government for a modest $42.5 million and $645 million in tax credits. Penny Pritzker then became Superior Bank’s first chairman before becoming director of its holding company Coast to Coast Financial holdings.
Under Pritzker, the bank’s composite rating had initially improved, and Superior began paying dividends of approximately $200.8 million to its holding companies. Because of Superiors' improved status, by 1993 it required less oversight from regulators.
In March of that year, Superior “executed its first securitization of subprime mortgage loans and began booking residual interests on its balance,” the GAO report said. An OTS examination in 1994 reported that Superior’s continued investment in the residual interests originated by Superior exposed them to a higher risk, and by 1995 Superior began an even risker subprime auto lending division.
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