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

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By Zachary Roth

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.

But now the New York Times has published emails exchanged between Millard and his buddies at Goldman and BlackRock, as well as other documents that shed light on the former P.B.G.C. chief's cozy relationship with the firms seeking business from his agency, and on how aggressively those two firms wooed Millard as they went after those contracts.

According to contracting experts, Goldman and BlackRock may have run afoul of federal contracting rules in how they courted Millard. The paper details the scope of the contacts they had with Millard:

Mr. Millard had at least seven meetings with Goldman executives in the year before the bidding started, and 163 phone contacts, the documents show. BlackRock had less frequent contact -- 39 phone calls in that 12-month period.

One BlackRock exec referred to Millard, in an email to a colleague, as a "very big fish on the line." And before a charity dinner at Chelsea Piers, one BlackRock exec wrote to another: "Try to get [blackRock CEO] Larry [Fink] seated next to Charles Millard."

But Millard himself seems to have been doing just as much to drive the relationships. Within weeks of taking over P.B.G.C. after being appointed by President Bush in 2007, he wrote excitedly to a Goldman vice chair who he'd long known:

I just became head of the pension benefit guaranty corp in dc appointed by pres bush... "Is there a team at goldman that does this and that would be interested in pursuing this business?

Responded the Goldman-ite: "Yes, absolutely!"

And other documents show a BlackRock executive telling a colleague that Millard had told him well before the bidding process began that Millard wanted to hire BlackRock.

The emails also shed light on the cozy, country-club culture, freely mixing business and social matters, that lubricated the contacts between Millard and his Wall Street pals. Millard had attended the same high school as his top contact at BlackRock, David Mullane, and the two both now live in Rye, New York, and attend the same church.

At one point, Mullane wrote to Millard:

Hope to see you at the Beefsteak Dinner tomorrow. If you're going perhaps we can catch up business for a few minutes before I thrash you in ping pong again.

Millard responded:

As I recall, the whole ping pong issue has been the subject of an sec investigation. SEC, as u kno (sic), stands for Support the Excellence of Charlie. And I think the commission has ruled infavor (sic) of Millard having retrospectively trounced Mullane.

Haw haw haw haw haw. Muffy in the bathroom stall. Margaret by the lake.

Mullane also knew that Millard's successor at PBGC might not treat BlackRock so favorably. He wrote (chauvinistically) to a colleague:

[Millard] is a lame duck political appointee as soon as the November election occurs. When the new man comes in at P.B.G.C., all bets are off for us.

Not that any of this worked out too well for Millard. A group of senators has called for a criminal investigation into Millard's relationships with his Wall Street friends, and whether they affected his agency's hiring decisions.

And since leaving government earlier this year, he still hasn't found a job.

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