Last week, President Biden used COVID relief money for an $82 billion bailout of pension funds mismanaged by the Teamsters and other entities.
The taxpayer-funded bailout is one of the largest ever and a financial disgrace.
It also looks to be illegal.
Nicholas Novak, Inspector General to the Pension Benefit Guaranty Corporation, says the government may be making “improper payments” to some of the failing pension funds which “represent a risk to PBGC’s reputation for fiscal responsibility, technical competency, and integrity.”
Worse still, the rescue plan demands almost no reforms from the errant pension funds. The plan would not remove any of the trustees – the people who lost all the money – and it doesn’t require full funding going forward – so more bailouts will be required in the future. The pension funds will not be required to put bailout money into investment-grade.
We also worry this latest bailout could be the tip of the iceberg. Pension obligations are now roughly $12 trillion.