May 2 (Bloomberg) -- President Barack Obama said he is nominating Penny Pritzker, the Chicago businesswoman, philanthropist and Hyatt Hotels Corp. heiress who led record fundraising for his 2008 campaign, as secretary of commerce.
Obama also announced today he’s nominating Michael Froman, currently the deputy national security adviser for international economics, as U.S. trade representative.
“Penny is one of our country’s most distinguished business leaders,” Obama said in the White House Rose Garden. “She’s built companies from the ground up.”
He said Froman has “established himself as one of the world’s foremost experts on the global economy.”
The two selections, which are subject to Senate confirmation, will fill out Obama’s second-term economic team. He made the announcement before departing for Mexico on a trip focused on trade and greater Latin American economic cooperation.
In nominating Pritzker, Obama is choosing someone who potentially will face aggressive questioning from Republicans during confirmation hearings because of her family’s complex financial portfolio.
Pritzker, 54, has developed a Chicago skyscraper, founded a luxury senior housing company and served as chairwoman for a credit reporting company. Her grandfather’s estate has been sued by the federal government over Caribbean tax shelters and she and her extended family were part of the 2001 failure of a bank that specialized in subprime lending.
Pritzker’s personal net worth is estimated at more than $1.5 billion, according to the Bloomberg Billionaires Index.
Bill Daley, a fellow Chicagoan who served as commerce secretary in President Bill Clinton’s administration and as chief of staff in Obama’s White House, said Pritzker realizes she’ll face detailed questions about her personal finances.
“Penny will make a sacrifice here and that is to open up what has been a very private person, on her business interests, because she wants to serve the nation,” Daley said in an interview today with Bloomberg Television’s Betty Liu. “When you step to this level, you open yourself up to a lot of criticism, some fair, some unjust.”
He said Pritzker’s close personal relationship with the president and his senior aides will be “very beneficial” to the Commerce Department.
Republicans previously have tried to use Pritzker’s business background against her and Obama. During the 2008 campaign, the Republican National Committee posted the headline “Obama’s National Finance Chair owned a failed bank that specialized in subprime lending” on its website.
Still, others with ties to subprime lending and complex financial transactions have been easily confirmed. Former Treasury Secretary Henry Paulson, who served in President George W. Bush’s administration after running Goldman Sachs Group Inc., was approved by the Senate on a voice vote in 2006.
The Pritzker family’s relations with labor groups, historically part of the Democratic Party’s base, have been another source of controversy in recent years and may prompt questions from senators.
The Hyatt chain has been targeted for protests by Unite Here, a union that represents workers in its hotels, because of alleged safety violations and contract disputes. In February, workers picketed outside the company’s downtown Chicago headquarters over the safety of its housekeepers and the replacing of longtime employees with minimum-wage or temporary workers.
In 2009, Bloomberg News reported Pritzker had told the president that she opposed legislation backed by unions called card check. It would make it easier for unions to organize by persuading a majority of a workplace’s employees to sign cards backing the effort instead of holding a secret-ballot election.
In a statement today, Unite Here called on Hyatt to fill Pritzker’s spot on the hotel chain’s board with a hotel worker, should she vacate her position. It would be the first-ever vacancy on the hotel board, the union said.
Senator Dick Durbin of Illinois, the No. 2 Democrat in the chamber and a supporter of organized labor, issued a statement today praising Pritzker and saying she’d “broken through the glass ceiling with her extraordinary intelligence and business acumen.”
Pritzker, who has a law degree and MBA from Stanford University in California, is the most public face of a family financial dynasty whose net worth has been estimated at more than $15 billion. Although she and family members are prominent philanthropists -- their names are on galleries in the Art Institute of Chicago, a medical school at the University of Chicago and a concert pavilion in the city’s Millennium Park -- they are also very private.
Her addition to the Cabinet would add gender diversity at a time when advocacy groups representing women and minorities have urged the Obama administration to better reflect the makeup of the voters who helped elect him to two terms.
Earlier this week, Obama named Anthony Foxx, the black mayor of Charlotte, North Carolina, as his next transportation secretary. Karen Mills, head of the Small Business Administration, has announced she plans to leave once Obama names a successor.
Froman, 50, a Harvard Law School classmate of Obama’s and former executive at Citigroup Inc., would succeed Ron Kirk, who left in March, as the president seeks free-trade accords with Pacific nations and the European Union.
The trade representative position carries the rank of ambassador and is a member of the president’s Cabinet.
In his State of the Union speech Feb. 12, Obama announced plans to pursue a free-trade agreement with the 27-nation EU that would expand the world’s largest economic relationship.
“Trade that is fair and free across the Atlantic supports millions of good-paying American jobs,” Obama said in the address. The president has set a goal of doubling U.S. exports by the end of 2014.
As the assistant to the president for international economics and a longtime confidant, Froman has been by Obama’s side at every international economic summit. Helping to wrap up trade deals has been part of his White House portfolio.
Froman holds a doctorate in international relations from Oxford University and a law degree from Harvard University, where he worked on the law review with Obama. In the Clinton administration, he served as chief of staff to Treasury Secretary Robert Rubin.
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