Goldman Sachs

Emails Show Cozy Ties Between Federal Pension Guarantor And Wall Street Firms He Hired

Zachary Roth | July 29, 2009, 1:57PM

Remember our old friend Charles Millard? He's the former Lehman investment banker who, after taking over the federal agency that guarantees our pension systems, had the genius idea to ignore a host of warnings and switch the agency's investment portfolio from conservative bonds to risky stocks -- just as last year's financial storm was gathering.

We also learned -- thanks to an inquiry by the inspector general for the agency, the Pension Benefit Guaranty Corporation -- that Millard had had extensive contacts with staff at Goldman Sachs, BlackRock Capital, and JP Morgan, during the period that the P.B.G.C. was choosing firms to hire as managers for its fund. And that Millard also raised the issue of getting a job with these firms once he left government. All three firms ended up winning contracts -- which were recently revoked, thanks to concern about those contacts.

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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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Charles Millard

Failure Of Oversight On Risky Investment Scheme?

Zachary Roth | April 1, 2009, 5:48PM

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.

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Charles Millard

Lawmakers Warned Millard About Risky Investment Scheme

Zachary Roth | April 1, 2009, 1:40PM

Remember Charles Millard, who we told you about earlier this week?

He was the Bush-appointed head of the government agency that guarantees workers' pensions, who made the genius decision to switch the agency's investments from conservative bonds to risky stocks -- right before the stock market tanked. The result: the Pension Benefit Guaranty Corporation's stock-related investments were down 23 percent as of September -- the up-to-date figure is believed to be much higher -- putting in grave doubt its ability to cover the expected losses in private pension funds that the market slump has already caused.

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