A bit more on the Charles Millard affair.
Earlier today, we reported that lawmakers had, in a letter, warned Millard, the former head of the government agency that guarantees workers’ pensions, that his planned strategy to shift the agency’s investments from bonds to stocks to jeopardize its ability to meet its obligations, and had laid out some guidelines he should adhere to ensure a cautious approach. Millard, of course, made the shift anyway, apparently just in time to absorb major losses for the Pension Benefit Guaranty Corporation as the stock market tanked last fall.
We also reported that Millard had notified Congress before going ahead with the shift, as he had been asked by Sen. Barbara Mikulski (D-MD) to do during his confirmation hearings.
So, we wondered, what happened next? Did Congress try to stop him? Did it ultimately conclude that he had adhered to the conservative principles laid out in the letter? How much blame more lack of oversight does Congress deserve?
A Senate staffer told TPMmuckraker that Millard’s approach, in Sen. Mikulski’s view, had “incorporated some of the spirit” of those guidelines, but that he hadn’t followed them as closely as she would have liked.
Perhaps more importantly, the staffer pointed out that Congress doesn’t have the legal right to formally approve investment decisions made by the PBGC. Rather, those decisions are approved by the PBGC board, which is comprised of the Secretary of Labor, the Secretary of the Treasury, and the Secretary of Commerce. At the time in question — 2007-2008 — those were Elaine Chao, Hank Paulson, and Carlos Gutierrez, respectively.
In other words, it appears that from Congress’s point of view, it did as much as it could to raise concerns about Millard’s risky strategy, by questioning him about it in his confirmation hearings, requesting that he inform lawmakers before going ahead with it, and formally raising doubts in a letter. Beyond that, it was the board’s responsibility.
Indeed, the Boston Globe reported that the board approved the strategy in a meeting in February 2008. But it added that “board members have had only a limited role in the agency’s operation, meeting only 20 times over the 28 years before 2008,” and that a report by the Government Accountability Office found that the board was too small to meet basic standards of corporate governance.
In other words, some structural changes may be needed here. But in the meantime, it looks like the Bush administration was able to do to PBGC what it tried and failed to do to Social Security — and we’re all left trying to clean up the mess.