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In 2007, after Congress rejected Bush's wonderful plan to privatize Social Security, he appointed a fellow by the name of Chuck Millard to head the PBGC, with the mandate to show how aggressive investing could rev up the returns of his agency. Before Millard's appointment, the PBCG's $50 billion in assets was invested in boring stuff like treasuries and bonds, but Millard decided to get into more "go-go" areas like the stock market, private equity, and commercial real estate.
This kind of investment made zero sense for agency that guaranteed private pensions, and was akin to "doubling down" on a bet in Vegas in hopes of breaking even.
Millard made his financial bet at the worst possible time- early 2008- and a lot of the money that was entrusted to him is now "gone-gone", just when retirees at companies like Chrysler need it. Now there are "serious concerns whether the PBGC is capable of insuring future retirement benefits of millions of workers and retirees covered by employee-sponsored pension plans after the losses it has sustained". This is government-speak for "Mr. Retiree, you're screwed."
Mr. Millard was fired on inauguration day, but as he left he was still defending his disastrous investment decisions as proper. He said this when asked about whether he had made a mistake:
"Ask me in 20 years. The question is whether policymakers will have the fortitude to stick with [my investment decisions]."
It looks like we may not have to wait 20 years. Mr. Millard is now under investigation for irregularities related to how investment contracts were awarded to Wall Street firms. And also about whether he approached the banks who were awarded the contracts for employment opportunities, against federal law.
