The more I look at these investment decisions of Pension Benefit Guaranty Corporation and former Lehman exec Charles Millard the more my suspicion grows that some very bad happened here. There's no question that something happened very bad for the pensioners who were relying on this fund. But is there any conceivable good reason why you'd take most (the quote from the Boston Globe is "much" of the funds) of the assets of the fund designed to insure pension benefits out of safe investments like bonds and put them into highly speculative investments -- hedge fund, equities, etc. -- just before the stock market collapsed.

Incompetence doesn't cut it as an explanation.

First, some topline numbers: The PBGC decided to put most of its $64 billion of reserves into stocks. And already by September 2008, i.e., before the bottom really fell out on Wall Street, the stock portfolio had already lost 23%. That percentage must be much higher today.

One of the big drives behind Social Security privatization was the desire to find more money -- in the case of Social Security, a lot more money -- to keep the fires burning on Wall Street. Not just more fees for the people handling the money, but more money to keep pushing asset values higher. This looks like the same thing just using slightly different means.

Late Update: TPM Reader HL notes that the behavior here is not at all unlike that of investment managers at a lot of big institutions who should pursue at least relatively conservative investment strategies -- college endowments, state pension funds, big non-profits, etc. And this is a very good point -- all part of the ever-escalating need over recent years, for greater and greater rates of return. Some worrisome hints came out this weekend about CALPERS (the California state pension system), for instance. So point taken. What still makes me suspicious about this case, though, is the timing. The Globe piece leaves some key variables a little vague -- just how much was put into stocks, precisely when, etc. But it sounds at least like PBGC moved a big portion of its assets into stocks last spring or summer.