People in the news

Penny Pritzker

Chief Executive Officer of Pritzker Realty

(Alex Wong/Getty Images)

Why She Matters

One could make the argument that Pritzker was the most important person in Barack Obama's presidential bid - except, perhaps, for Obama himself. A longtime Obama friend, Pritzker was national finance chairwoman for the Obama campaign throughout his 2008 presidential effort. She helped him raise a record $750 million from a dizzying array of donors.

Obama's huge fundraising advantage not only gave him clout during the primaries against Sen. Hillary Rodham Clinton (D-N.Y.), but also provided the means to bypass federal funding for the general election and dramatically outspend Sen. John McCain (R-Ariz.). The Obama campaign raised an eye-popping sum, $150 million in September 2008 alone, allowing it to run television ads and pay for campaign offices in dozens of states that were out of play for 2004 presidential nominee Sen. John F. Kerry (D-Mass.).

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Background

At a Glance

Career History: Campaign Finance Chair for Barack Obama (2007 to 2008)
Hometown: Chicago, Ill.

Alma Mater: Harvard University, B.A. (economics); Stanford, J.D./MBA
Web site

Path To Power

Pritzker was born into one of the wealthiest families in the United States. Her grandfather started the family fortune during the Great Depression, branching out from his work at the family law firm Pritzker & Pritzker to buy up depressed properties for little money and sell them years later for huge profits. His sons similarly bought failing businesses and turned them around, accumulating about 100 companies.

In 1957, the sons bought a small hotel outside of Los Angeles International Airport called the Hyatt House and began building similar hotels near airports around the country. Penny's generation of Pritzkers, which includes cousins Thomas and Nicholas, took over an operation that included 213 hotels and casinos with 28 more in the works when her uncle, Jay, died in 1999.

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As a five-year-old child, Penny Pritzker helped her father inspect the bathrooms at the Hyatt near her home in Atherton, Calif., and she was the first woman in the Pritzker family to go into the family business. At age 16, she asked her grandfather for a role in the company, and she earned a B.A. in economics from Harvard University and a J.D./M.B.A. from Stanford. She joined the family law firm, Pritzker & Pritzker, which her great-grandfather, Nicholas, started in 1902 after escaping from Russian in 1881. According to Penny, Nicholas arrived in the U.S. when he was 10 years old, dirt poor and taught himself English by reading the newspaper and studying the dictionary. He sold newspapers, was a tailor's assistant and worked as a pharmacist while going to law school at night.

Joining Hyatt

In 1985, the year she graduated from Stanford, Pritzker joined Hyatt as a financial analyst. In 1987, her uncle, Jay, who was running the company, gave her $30 million to start Classic Residences by Hyatt, a collection of upscale retirement homes. For the first four years, the company floundered, but had 21 retirement homes and generated $434 million in revenue in 2007.

In 1995, Jay passed the family business down to cousins Penny, Thomas and Nicholas Pritzker, and died two years later. In 1999, seven relatives threatened to sue Penny, Thomas and Nicholas over a money dispute. They agreed to settle and developed a plan to sell off some of the family's assets, first creating a company called Global Hyatt to house entities that they would keep.

About that time, Penny Pritzker went into business with Martin Nesbitt, a former real-estate investor from Chicago, on a company called the Parking Spot, which was designed to handle remote parking lots for airports. In 1997, she invested $50 million in the company. Now, with more than 30,000 spaces in a dozen cities, the company generates more than $70 million in annual revenues.

Meeting Obama

It was Nesbitt who first introduced Pritzker to Barack Obama. Nesbitt convinced Pritzker to bring her children to a basketball clinic for elementary school-age children at the YMCA. Craig Robinson, a former Morgan Stanley bond trader who now coaches basketball at Oregon State and is also Michelle Obama's brother, ran the clinic. Barack Obama, who is godfather to Nesbitt's son, often came with Michelle to watch. Pritzker's kids also attended the Lab School in the Hyde Park neighborhood of Chicago, where the Obamas lived, and Michelle is on the school's board.

The two families become close, and spent an increasing amount of time together. In 2002, at the Pritzkers' summer home in Michigan, Barack Obama told Penny and her husband, Bryan Traubert, that he was planning on running for the U.S. Senate in 2004 and wanted their support. "It took about no time for us to say that this is something that we wanted to do," Pritzker said, despite the fact that Obama was a longshot to win at that time.

In the beginning of 2007, as speculation surrounding a presidential run by Obama reached fever pitch, Pritzker got the feeling Obama was going to ask her to work on the campaign. She was CEO of Pritzker Realty Group, served on the board of Global Hyatt Corporation, director of LaSalle Bank Corporation, chair of TransUnion credit reporting agency and was on the board of the Parking Spot -all Pritzker family entities. She told her husband that she thought she had too much on her plate, and her husband started knocking on the kitchen door. "This is destiny knocking on the door of our nation," she recalls him telling her. "You have to find a way to make this work."

The Issues

Pritzker had never run a political fundraising machine before. In early 2007, she met with 40 of Obama's wealthiest backers, many of whom were long-time fundraisers.. She didn't think Obama could compete with Sen. Clinton using a tradition fundraising model, but she wasn't able to answer all of their concerns. "There didn't seem to be a clear agenda," Colorado fundraiser David Friedman said. "We all came away with more questions than answers."

Eventually, Pritzker came up with a more tangible plan. Her fundraising team developed a strategy to go after the first-time, small-money donors. When a media entrepreneur asked her in February 2007 if he could throw an Obama rally with a $25 dollar ticket charge, Pritzker said yes. More than 3,000 people came. Obama raised $25 million in the first quarter of 2007. And she solicited contributions from 100,000 donors.

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What's more, when people gave any donation, from the $2,300 maximum to as little as a few dollars, Obama had them fill out a donation form. That resulted in an e-mail list that grew to more than 5 million people during the campaign. She divided the country into 13 regions and allowed regional directors to run the show in their regions without having to get her approval.

Internet Fundraising

Obama's new media team made it easy for donors to contribute online not just through Obama's Web site, but also via Facebook and iPhone applications. The result was 6.5 million online donations totaling more than $500 million. On the day Obama announced his campaign, $500,000 in online donations came pouring in.

In September 2008, Obama's biggest fundraising month of the campaign, $100 million of his $150 million came from online donations. "You looked at the money being raised online in the same way you looked at the crowds who came to the rallies," said Joe Rospars, the director of Obama's new media department. "You were constantly surprised at the number of people who were coming out to see him. [With online donations], people exceeded our expectations as to what they were willing to do."

Pritzker's fundraising team established a weekend boot camp for first-time bundlers called Obama University. Pritzker decided not distinguish between large and and small donors except by establishing a national finance committee. And she kept going back to donors repeatedly. In October 2007, Pritzker convinced Obama to fly to Des Moines, Iowa, to reassure fundraisers over his low polling numbers. "I trust her that if she's bringing something to me, it's worth paying attention to," Obama said.

The 2007 first-quarter numbers put Obama on the map and proved that he could compete with Clinton. While 75 percent of Clinton donors had "maxed out" to her campaign and she had more cash in the bank, Obama had raised more money for the primary. Later in the campaign, Obama's huge fundraising numbers allowed him to put multiple offices in states where Clinton's presence was minimal. For example, less than a week after Clinton opened her first office in Oregon, Obama opened his sixth one in the state, a trend that continued around the country.

Some worried that Obama's fundraising, which was strong in the beginning, would weaken as the campaign lost its novelty, but the opposite happened. Obama, who was the first major-party candidate to bypass public financing since it began in the 1970s, raised an estimated total of $750 million for his campaign.

Hugely successful fundraising led to Obama victories in previously reliable red states like North Carolina and Virginia, where Democrats hadn't won since the 1960s. Those victories can be directly tied to Obama's abundance of money. Obama spent $136 million from Oct. 16 to Nov. 24, 2008; John McCain spent $26.5 million.

Obama's campaign chief of staff Jim Messina said the campaign consistently added money to its media and mail budgets. Money "was just raining down," Messina said. When strategist David Plouffe asked for $7 million to use for a 30-minute nationally televised documentary commercial, Messina had it. Obama had $30 million in his coffers after the election.

Pritzker didn't fly solo. She worked closely with finance director Julianna Smoot and many other suggested key ideas. Pritzker effectively acted as the CEO of what became practically a Fortune 500 company.

Subprime Lending

Pritzker earned praise for her work on the campaign trail, calling 50 donors per day and running the most successful political fundraising organization in history.

But it wasn't long ago that she was at the center of a major subprime lending crisis. During the 1980s and early 1990s, she was chair of Illinois' Superior Bank, which was at the forefront of subprime mortgage lending. Though she stepped down as chair in 1994, long before the bank collapsed, Pritzker backed the subprime lending strategy as the bank was failing. In 2001, Superior was forced to close. The Pritzkers agreed to a voluntary settlement where they would pay the government $460 million over 15 years to help compensate for the money the bank lost when it insured the deposits. But some of the bank's constituents had more money in the bank than was insured, and they are still suing the family to recoup their losses. Pritzker says that the reasons the bank failed are "complex," but explains, "I am proud of how I and my extended family dealt with" Superior's closure.

Obama caught flak for his connection to Pritzker because he often criticized banks that engaged in subprime mortgage lending. But the campaign doggedly defended its fundraising force, saying she was "never accused of any wrongdoing nor did she receive compensation in relation to the closing of Superior Bank."

The Network

Pritzker is at the center of Obama's Chicago network.

She worked on a development project with close Obama advisor and CEO of The Habitat Co. Valerie Jarrett . And she funded Martin Nesbitt's entrepreneurial endeavor, The Parking Spot, which has turned into one of the largest airport parking companies in the country. She met Barack Obama and Michelle Obama through her kids, who played basketball at a clinic run by Craig Robinson , Michelle's brother.

Campaign Contributions

After Obama became the Democrats' nominee, Pritzker was one of the first to write Clinton a check to help pay off her campaign debt, and she encouraged others to do the same.

Over the years, Pritzker has given thousands of dollars to dozens of Democratic candidates around the country. In 2008, she gave more than $82,000, including the maximum allowable to Obama, Clinton, Rep. James E. Clyburn (D-S.C.), Sen. Dick Durbin (D-Ill.), Rep. Bill Foster (D-Ill.), Rep. Robert Wexler (D-Fla.) and others. She gives almost exclusively to Democratic candidates, but contributed to both Sen. John McCain (R-Ariz.) and George W. Bush before the 2000 election. Since she first started donating money to him in 1999, Pritzker has given Obama $19,700, according to the Center of Responsive Politics.

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