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A high-profile appointment who sees tourism as an industry, as opposed to a light lifestyle choice, holds significant meaning to the industry.

Chicago business executive Penny Pritzker was nominated by President Barack Obama to become the new Secretary of Commerce on Thursday, in an expected move that could prove controversial for the longtime political supporter and fundraising heavyweight.

Pritzker is on the board of Chicago-based Hyatt Hotels Corp., which was founded by her wealthy family and has had rocky relations with labor unions. Her nomination, which still needs Senate confirmation, also could bring up questions about the failure of a bank partly owned by her family.

With a personal fortune estimated at $1.85 billion, Pritzker, 54, is listed by Forbes magazine among the 300 wealthiest Americans.

If the nomination is confirmed, Pritzker would become the first member of her influential family to hold a top-level political office, creating an opportunity to make a name for herself apart from the leadership roles she has played within the family’s many businesses, which in recent years were divested.

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, among other investments.

Penny Pritzker runs PSP Capital Partners, an investment firm, and its affiliated real estate investment firm, Pritzker Realty Group. 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 reelection campaign.

In announcing Pritzker’s appointment from the White House 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 is 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 he 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 Bill Daley, a Commerce Secretary under Bill Clinton and a White House chief of staff to Obama. “She’ll really be in the room as they’re talking through policy, whether it’s around the debt or around the budget or a tax bill if there is one. Because of that unique relationship that puts her in a different category than a lot of people who go into the cabinet.”

Pritzker’s nomination must be confirmed by the Senate. First she will appear before its Commerce, Science and Transportation Committee, which will hold a vote on her nomination. The panel is chaired by Sen. Jay Rockefeller, D-W.Va., and its top Republican is Sen. John Thune, R-S.D. Neither of the two U.S. senators from Illinois sits on the panel.

“You now begin to be heavily briefed by the department about the department,” Daley said. “You then begin a series of one-one-one meetings with members of the Commerce Committee. The White House usually picks a few other senior members of the Republican and Democratic Senate to visit. And if they’re smart about it, they’ll place calls to some Republican House members, even though they don’t have anything to say on the vote.”

Thune, the highest ranking Republican on the Senate Commerce Committee, said in a statement he looked forward to meeting Pritzker and learning more about her background. He struck a note of caution, saying: “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.”

As Commerce secretary, Pritzker would take charge of the administration’s efforts to build relations with business leaders who were often on the sharp end of the president’s first-term rhetoric. The department also has 12 separate agencies including the Bureau of Economic Analysis; Census Bureau; Patent and Trademark Office; and National Oceanic and Atmospheric Administration, which includes the National Weather Service.

The White House conducted an in-depth review of Pritzker’s background in preparation for the confirmation hearings. A senior administration official who asked not to be identified in order to talk about internal White House discussions said the administration concluded Pritzker was “definitely confirmable.”

The president’s vetting attorneys went carefully through her lengthy list of investments and assets, noting what the official called her “rigorous and diligent and thorough” participation in the process.

The White House has so far not released an anticipated ethics statement from Pritzker, which would outline what changes she is making to her investment portfolio in order to avoid conflicts of interest. She also likely will have to step down from Hyatt’s board of directors as well as other corporate posts.

“It’s just going to be whether or not the Republicans go after her because she’s close to the president,” Daley said, when asked what would be the most likely challenge ahead.

Pritzker also could draw fire from labor leaders. Hyatt has long battled Unite Here 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 she stepped down, a union official said she “has a long and storied history as an anti-labor and anti-worker kind of boss.”

She could also face scrutiny over the collapse of Superior Bank, which was co-owned by her family. The bank, based in Hinsdale, Ill., was involved in subprime mortgage lending, and its failure in 2001 stirred charges of fraud and mismanagement.

Four years ago, Pritzker withdrew her name from consideration for the Commerce job, citing family obligations. At that time, the peak of the financial crisis, Pritzker was managing a large portion of the family’s billions of dollars in assets.

Her success in business is one of the reasons Obama wanted her in his cabinet, aides said. She is the second CEO to be named to the cabinet in his second term. Obama recently nominated Sally Jewell, CEO of the outdoor recreation company REI, to serve as his Interior secretary.

A major donor to Obama, Pritzker has given hundreds of thousands of dollars to Democrats and their state parties across the U.S. During Obama’s 2008 run for the White House, she was a campaign “bundler” who encouraged friends and associates to give and raised between $200,000 and $500,000 for him that cycle, according to the Center for Responsive Politics.

Pritzker also was an Obama bundler during the 2012 race, raising at least a half-million dollars for his re-election. A co-chair of Obama’s first inauguration, Pritzker just gave $250,000 to help pay for his second one in January, federal reports show.

The center, examining what she, her spouse and dependent children have given to federal candidates, parties and political action committees since 1990, put the total at $1,093,744.

Advisors to the president say Obama has wanted to name Pritzker for months now, citing her work in building five different companies and her service on the president’s Council on Jobs and Competitiveness and on the Economic Recovery Advisory Board.

Outside of business circles, the Pritzker family is mainly known for its philanthropic contributions and activities, such as the Pritzker Architecture Prize, the Pritzker Pavilion at Millennium Park and the Pritzker School of Medicine at the University of Chicago.

But despite its wealth and influence, the family has not had a recognized tradition of political leadership or public service. Of the 13 grandchildren of family patriarch, A.N. Pritzker, only Penny and her brother J.B., who also lives in Chicago, have been prominently involved in national politics, an interest they inherited from their late mother.

“The fact that she has been active in politics with the president for a very long time says a lot about her,” Daley said. “Someone in Penny’s position could sit on a beach all day and do nothing, and not be involved. But she’s been involved. So it doesn’t surprise me that she wants to serve the president, serve the nation. It’s a challenge but it’s an opportunity of a lifetime.”

On several occasions, the Pritzker family has been at odds with the federal government — over the bank failure and an issue of questionable tax-reduction tactics. However, her personal network, business credentials and family name have served Obama well, both financially and politically.

After overseeing a recording-breaking fundraising effort in 2008 as Obama’s national finance chair, she served on two White House councils focused on the economy and became a conduit for business executives to voice their frustrations with the president.

For instance, as soon as financial reform 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 to meet with Obama while he was in town attending 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.”

While her decade-long relationship with the president will give her instant credibility with corporate and foreign leaders, she has few to no allies within organized labor. Hyatt Hotels, on whose board she sits, remains in a four-year labor dispute with its primary union in Chicago, Unite Here Local One, over contract provisions.

The fight 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, Ind., manufacturing facility and accept millions in tax incentives to move jobs to Louisiana.

Since Pritzker’s name surfaced for the Commerce Secretary post, Local One’s President Henry Tamarin has been silent on the pick and declined interview requests with The Tribune. He did so again Thursday through a Unite Here national spokesman. His son, Nate Tamarin, works at the White House and is a liaison to labor.

Instead the national union issued a statement Thursday, saying that Pritzker’s nomination is expected to create a vacancy on Hyatt’s board and the company should fill that spot with a hotel worker.

“I’m confident that Ms. Pritzker will do her best to help our country succeed,” Cathy Youngblood, a housekeeper at the Hyatt Andaz in West Hollywood, said in the statement. “But if Hyatt is going to succeed, they need to change. … I believe they need someone like me to help.”

The Chicago Teachers Union, meanwhile, has been more outspoken. Pritzker stepped down from the Chicago Board of Education in March days before Mayor Rahm Emanuel announced he had targeted 53 elementary schools and a high school program to close, affecting an estimated 30,000 students. By stepping down, Pritzker avoided having to cast a politically unpopular vote and endure further protests as the White House considered her for the Commerce Secretary post.

“We know Penny Pritzker has a long and storied history as an anti-labor and anti-worker kind of boss,” Kristine Mayle, financial secretary of the Chicago Teachers Union, told the Tribune in March. “Her policies adversely affect working families. She has worked to close schools and destabilize neighborhoods, and we hope she does a better job in her new position, if she gets it.”

Mayor Rahm Emanuel, in a statement, called Pritzker a “champion for our students and our city” who had shown “incredible commitment and leadership in her every business, civic and philanthropic endeavor.”

Also trailing Pritzker during confirmation hearings will be the 2001 failure of Superior Bank, then the nation’s largest bank failure in a decade, where Pritzker was chairman from 1991 to 1994. Pritzker also was assigned to deal with the matter after her uncle Jay died in 1999. The bank was co-owned by the Pritzker family and New York developer Alvin Dworman — 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 them off to investors; a strategy similar to one that contributed to the near-collapse of the nation’s economy less than a decade later.

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 for medical reasons. The department had a $7.5 billion budget and 47,000 employees worldwide.

Pritzker, at least, is accustomed to numbers that large.

(c)2013 the Chicago Tribune. Distributed by MCT Information Services. 


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Tags: labor, politics, tourism

Photo credit: Penny Pritzker of Chicago, shown on February 27, 2013, at a Chicago Public School Board of Education meeting, is reportedly being considered to be nominated the U.S. Secretary of Commerce. Nancy Stone / Chicago Tribune/MCT

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