Charles Millard

Bush Pension Chief Charlie Millard To Senate: "I'll Plead The Fifth"

Moe Tkacik | May 20, 2009, 6:40PM

For practically his entire 18-month term directing the obscure Pension Benefits Guaranty Corporation, Charlie Millard could not stop talking about his radical new plan to plow the majority of the agency's coffers -- which offer partial bankruptcy insurance to the retirement funds of 44 million Americans -- into stocks, real estate and private equity.

Well, that ended today.

Millard pleaded the Fifth three times before a Senate subcommittee convened to discuss the fund this afternoon, refusing to answer any questions about his controversial tenure, which began when Bush appointed him interim director in May 2007 and ended when Obama was sworn into office. There are some pretty good reasons for him to : last week four senators formally requested the Office of the Inspector General to open a criminal investigation into Millard's activities in response to a preliminary OIG report detailing the former Lehman Brother's executive's eyebrow-raising call logs during his time at the office. The report showed that Millard made hundreds of calls to Wall Street investment banks in line for lucrative contracts managing the fund's money under the new investment regime, and traded dozens of emails with a Goldman Sachs executive assisting Millard's post-D.C. job hunt after Goldman was awarded just such a contract.

The PBGC says most of Millard's planned asset reallocation had yet to be completed when he left, and that it is now considering tearing up some of the contracts under which it planned to farm out the funds to the likes of Goldman, JP Morgan, BlackRock and others. But the fund still managed to triple the size of its deficit in the six months between September 30 and March 30, according to numbers released by the Senate today -- meaning the fund currently owes $33.5 billion more than it has the money to cover.

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Charles Millard

Charles Millard's Devastating Term "Insuring" Nation's Pensions, By The Numbers

Moe Tkacik | May 15, 2009, 2:09PM

We just told you about the probes underway of Charlie Millard, the obscure Bush-appointed former director of the Pension Benefit Guarantee Corporation, which provides a form of limited bankruptcy insurance to the retirement funds of 44 million Americans. Millard's aggressive plan to sell off most of the PBGC's bonds and plow the majority of its funds into stocks and real estate has been a pension world controversy since he started at the agency in May 2007, at the beginning of the credit crunch. Even by the highly imperfect standards of conventional Wall Street wisdom, the former Lehman Brothers executive's investment strategy appeared almost gratuitously risky.

But it wasn't until the Office of the Inspector General began sniffing around the agency that Millard's short-lived stint in the federal government began to take on a more sinister light. We've boiled down the draft report of their audit, released yesterday by Congress, to a few key figures, adding a few of our own for perspective.

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Charles Millard

Congress Probing Charlie Millard's Quixotic "North Star" Strategy For "Insuring" Pensions

Moe Tkacik | May 15, 2009, 12:32PM

Even later update -- Earlier posts read as though Millard's investment plan had been entirely implemented, which we don't believe to be the case. A Congressional staffer said the PGBC had refused to say how much of the fund had already been reallocated under Millard's guidelines. But a PGBC spokesman told BusinessWeek none of it had and that the agency would "work with our board to decide whether these contracts should be terminated and whether strategic partnerships fit into the board's investment approach going forward."

The original version of this post was also somewhat unclear on the specifics of the various investigations into Millard. Both houses of Congress are investigating Millard and a group of senators requested a criminal investigation as well.

Remember Charles Millard? He's the former Bush-appointed director of the Pension Benefits Guaranty Corporation, and we expect to be seeing a lot more of him as congressional investigations into his brief but significant tenure at the agency gathers steam, starting with a scheduled appearance next Wednesday.

Some background: the Pension Benefits Guaranty Corporation insures a portion of the retirement funds of 44 million Americans to protect their savings accounts from the capriciousness of market conditions. Somehow, by the perverse illogic that defined the financial services industry of the past few years it came to pass that this fund would be run by a former Lehman Brothers executive who would devise a plan to plow the majority of its investment portfolio into the volatile stock market and the massively overheated real estate market under the pricey guidance of financial advisers at Wall Street's most prestigious investment banks, such that some such that billions of dollars would vanish in the course of months. An honest mistake, or was unethical behavior involved?

The Office of the Inspector General conducted an audit of Millard, who spearheaded this effort, and found no evidence he'd committed any actual crimes -- but enough "clear violations" of agency ethics rules to alarm Congress, which released the OIG's draft report yesterday and announced an investigation of Millard and said it had requested a criminal probe of him as well.

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