The three-member board of directors overseeing the federal corporation that insures traditional pensions of 44 million American workers is too small and didn’t meet at all during the two-year banking crisis that shook financial markets worldwide, the Government Accountability Office says.
The Pension Benefit Guaranty Corp’s (PBGC) management and security weaknesses were spotlighted in a Center for Public Integrity investigation earlier this year. The PBGC, which insures defined benefit retirement plans, had a financial deficit of $23 billion in September, due in part to terminated pension plans at Lehman Brothers, IndyMac Bank, Circuit City, Nortel, Delphi Corp. and other big ones in the past couple of years.
The GAO criticized the PBGC board for failing to meet a single time from February 2008 through February 2010, a period when financial markets tumbled because of a housing-triggered credit meltdown. The organization’s board is made up of the secretaries of the Treasury, Commerce and Labor Departments.
“The size of PBGC’s board also prevents the members from establishing standing oversight committees,” Barbara Bovbjerg, GAO managing director of education and workforce issues, said in testimony at a Senate hearing this week. “PBGC’s governance structure is also vulnerable to disruptive transitions with each administration change. The board, its representatives, and the director typically change with each presidential transition, thus limiting the board’s institutional knowledge of the challenges facing the corporation.”
Another problem, Bovbjerg said, is that the three existing board directors have limited time to focus on the PBGC because of their responsibilities as cabinet secretaries. So far in 2010, the board has met three times after a two-year period of no meetings, she said.
FAST FACT: PBGC receives no taxpayer funding and finances its insurance coverage with premiums paid by companies, assets acquired from terminated plans, and investment income. In September 2010, the corporation had $79.5 billion in assets and $102.5 billion in liabilities.
Following are other new watchdog reports released by the Government Accountability Office (GAO), various federal Offices of Inspector General (OIG), and other government entities. Congressional Research Service reports, which prepared for lawmakers but not made public, were provided by the Center for Democracy and Technology.
- Nearly 50,000 prison inmates claimed tax refunds totaling more than $130 million this year, and the IRS is failing to routinely screen prisoners’ returns for fraud. (OIG)
- Congress must “urgently” take action to restore the U.S. Postal Service’s financial viability after an $8.5 billion loss in 2010, nearly double its loss in 2009. (GAO)
- The IRS should make greater use of banks’ currency transaction reports – required by law for any currency transactions of $20,000 or more – to identify individuals who are not filing tax returns. The currency reports are now mostly used by police to detect money laundering, drug trafficking, and terrorist financing. (OIG)
- The Social Security Administration should ensure that recipients of Social Security payments are informed of three electronic banking options that exist; nearly 10 million people or 16 percent of all beneficiaries still get checks. (OIG)
- The Commerce Department must continue taking action to restore the reputation of the National Oceanic and Atmospheric Administration, which is responsible for both protecting coastal resources and supporting the fishing industry. (OIG)
- The White House Council on Environmental Quality’s proposed revisions of principles to guide water resources planning should be clearer and more consistent. (National Research Council)
- The Social Security Administration had a 60 percent jump in the number of reported threats against employees or property from 2009 to 2010, according to an employee survey which also found the majority of workers felt safe and work and knew how to report a threat to the agency. (OIG)