A billionaire Chicago family that donated and raised hundreds of thousands of dollars for President Obama got a $3.5 million discount last year for paying off early a $460 million settlement deal it agreed to in the 2001 failure of a Chicago-area bank it owned.
And while the wealthy Pritzker family got a multimillion-dollar break, 1,400 former depositors were not so lucky — they are still owed more than $10 million in savings they lost when the bank’s doors were shuttered, and there is little chance they will ever get those funds back.
The Pritzker family, which made its fortune in hotels and manufacturing, agreed to the $460 million settlement in December 2001 to avoid sanctions and civil lawsuits in the failure of Superior Bank in Hinsdale, Ill. Federal regulators said the bank failed because of its aggressive strategy of making high-risk subprime loans to borrowers with troubled credit histories.
The settlement agreement with the Federal Deposit Insurance Corp. (FDIC) allowed the Pritzker family to spread their payments over 15 years without having to pay interest. But after paying $316 million, the family quietly struck a deal with the FDIC in May 2011 to discount the $144 million balance in return for paying off the debt early.
The payoff is outlined in records made public by the FDIC late Friday in response to a Freedom of Information Act (FOIA) request by The Washington Times, which initially broke the story of the Pritzker settlement payoff earlier this month.
“I think it is ridiculous that the government let them pay off the settlement early without having to pay the full amount.” said Anne MacKay of Arlington Heights, Ill., whose aunt Irene Kortas’ estate is still owed about $20,000. “I don’t think it is fair to the people who lost their money.”
John W. Courtney, 67-year-old Vietnam veteran and construction worker still owed $50,000, said the FDIC should first have made sure the depositors got paid.
“I have never known the federal government to give a discount if the money is owed … , ” he said. “It is who they [the Pritzkers] know and how much they have.” He said there should be no discount “for somebody who cost the federal government $300 million” when Superior Bank failed.
Clinton Krislov, an attorney for some of the uninsured depositors, said it was wrong for the government to give the Pritzkers “a wealthy person’s pass.”
“The Pritzkers shouldn’t have had an interest-free deal upfront, and they shouldn’t have gotten a discounted payoff at the end,” he said. “And the uninsured depositors should have been made whole.”
Mr. Krislov said the Pritzkers should use the discount to help offset the $10.3 million still owed the depositors.
David Barr, an FDIC spokesman, said the agency considered the settlement to be paid in full, adding that those depositors whose saving totaled more than the FDIC’s guaranteed insured amount of $100,000 received their money “five years sooner than if last summer’s agreement had not been reached.”
Penny Pritzker, national finance chairwoman of Mr. Obama’s 2008 presidential race who has “bundled” or collected between $100,000 and $200,000 for his current campaign, was chairwoman of Superior Bank from 1991 until 1994, stepping down for a seat on the board of the bank’s parent company.
Her spokeswoman, Susan Anderson, did not respond to requests for comment on the discounted loan.