Superior Bank of Chicago

The Superior Bank FSB was a Hinsdale, Illinois-based savings and loan association that collapsed in July 2001 with some $2.3b in assets. It was co-owned by the Pritzker family of Chicago.

Superior opened in 1988 under conditions created by the Federal Home Loan Bank Board, which made generous arrangements for the takeover of several failed thrifts. The bank was a 50-50 partnership between the Pritzkers (the elder Jay, Penny and Thomas) and real estate investor Alvin Dworman, who ran Superior from his New York office after Jay Pritzker's death in 1997. The Pritzkers and Dworman bought the failed Lyons Federal for the relatively modest price of $42.5 million, with each using a shell corporation to control half of Coast-to-Coast Financial Corporation (CCFC), a holding company created to own Superior.

In July 2001, Superior was seized by federal banking regulators after the Pritzkers reneged on a recapitalization program. The Pritzker family entered into a $460 million, 15 year, interest-free settlement in December 2001 to protect the family's business reputation and avoid civil forfeiture and litigation. At the time, Superior Bank was the largest bank failure in more than a decade. As of March 2012, former Superior Bank depositors are still owed over $10 million.

According to a press release from the Office of Thrift Supervision,

George Kaufman, a finance professor at Loyola University Chicago called Superior's failure "a tale of gross mismanagement," adding that "[Superior] was engaged in relatively unethical practices, fancy-footwork accounting, playing it very close to the edge."

Kaufman says many share in the blame for the mess-the bank's managers, directors, and auditors, as well as banking regulators-but he also wonders how the Pritzkers, as co-owners, could have allowed it to happen. "One of the great mysteries to me is what the Pritzkers were up to, why they took these chances," he said. "It makes no sense given their wealth and visibility."

In December 2001, the Pritzkers agreed to pay a record $460 million to the federal government to avoid being punished for the failure of Superior Bank FSB. It was a 15-year, interest-free settlement that granted the Pritzkers a share of the government's settlement with the bank's former accountants. In June 2012, news reports revealed that the Pritzker family received a discount in 2011 on the 2001 settlement.

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