Campaign Advisors for Obama and Clinton Tied To Lending Crisis

On the campaign trail, Democrats Hillary Rodham Clinton and Barack Obama have proposed cracking down on the predatory lending that they say helped fuel the foreclosure crisis.

Both presidential candidates, however, rely on close advisers who had oversight roles at financial institutions that went bust because of subprime loans.

Clinton's campaign manager, Maggie Williams, earned at least $175,000 serving from 2000-07 on the board of Long Island-based Delta Financial, which filed for bankruptcy last year after a history of high-cost loans to low-income borrowers, according to public records.

Obama's national finance chairwoman, Penny Pritzker, was chairwoman of the board of a Chicago-area bank in 1993 when it adopted a subprime business strategy that regulators say ultimately led it to collapse in 2001.

Superior's board and managers "ignored sound risk-management principles and failed to adequately oversee Superior's operations," the Federal Deposit Insurance Corporation's (FDIC) Inspector General concluded in 2002.

"Superior was effectively facilitating very sleazy lending," said Bert Ely, a Washington, D.C., banking consultant who testified before Congress on the Superior failure.

"Delta was one of the bad guys," said Irv Ackelsberg, a legal aid lawyer in Philadelphia who represented subprime borrowers. A lawyer for Delta did not return calls.

"I joined the board because I ... understood that the subprime option, for all its challenges, was the only chance for many people to own a home," Williams said.

Clinton told USA TODAY, "We all have friends, associates and staff members who have private sector involvement … I don't see any connection at all between her prior employment and what I'm saying" about the loan debacle.

Superior, co-owned by Pritzker family trusts, began focusing on subprime loans in 1993, according to the FDIC Inspector General's report. At the time, Pritzker was the board's chair. She left the board in 1994 and continued as a director of the bank's holding company. In 2002, the Pritzkers agreed to pay, through trusts, $460 million in a settlement with the government relieving them of liability.

"I regret that Superior Bank failed," Pritzker told USA TODAY. "My family voluntarily agreed to pay the FDIC $460 million … without litigation or any allegation by federal regulators of wrongdoing. I am proud of how my family responded to this situation."

Pritzker, a key player in Obama's fundraising network since his 2004 Senate run, has helped him raise more than $190 million for the presidential race.

In a statement, the Obama campaign noted that Pritzker was not accused of wrongdoing, and said: "Sen. Obama believes that the current housing crisis was caused by lax regulation and a system that put the interests of corporations before the interests of homeowners and investors."

A top economic adviser to Republican candidate John McCain, former senator Phil Gramm, also has ties to the subprime problems.

Gramm is vice chairman of UBS, which recently disclosed $19 billion in losses on investments in subprime mortgages. UBS, however, did not make subprime loans, UBS spokesman Doug Morris said.

Gramm, McCain's general co-chairman, was traveling and unavailable for comment, Morris said.