Apparently under the Bush Administration,  upper echelon Wall Streeters had another venue besides the Treasury Department to call their own: the federal agency that backstops billions in pension payments for companies at risk for bankruptcy.

The Boston Globe, Josh and Zachary Roth today highlight yet another tale of fiduciary negligence and the woeful mismanagement of public funds - the reallocation of the reserves of the Public Benefit Guaranty Corporation(PBGC) into high-risk investments last year from bonds, a strategy a former advisor likened to a company that insures hurricane damage investing its premiums in beachfront property.

Charles E.F. Millard, formerly of Lehman Brothers, took over as director of PBGC in 2007, and quickly switched the agency's mix of investments to 55 percent of stocks and real estate from 15 to 25 percent just as markets went into a drastic freefall.  Interestingly, of this new allocation 5 percent could now be invested in private real estate and 5 percent in private equity firms.

What's so interesting about this particular shift?  Some quick sleuthing reveals that in 2004, after leaving Lehman, Mr. Millard went to work for a company called Broadway Real Estate Partners.  His new job?  According to the company's press release:

Mr. Millard will be responsible for the creation and direction of BP Securities, a brokerdealer which will syndicate both equity and debt in Broadway Partners real estate investments to private individuals, families and institutions.

Scott Lawlor, CEO of Broadway Partners, was quite pleased with Mr. Millard's hiring:

[Mr. Millard] is ideally suited to expand Broadway's ability to  offer real estate investment opportunities to our investors and to help us expand our investor base.

And Mr. Millard was equally enthusiastic about the arrangment, saying :

 "I hope to expand our pool of investors as Broadway increases its investments."

Is it just my overworked cynicism, or does it seem exceedingly convenient and self-serving for the Wall Street-beloved Bush adminstration to put a fox -  sorry, a Wall Street executive whose prior responsibility has been to expand the opportunities for real estate investment - in a henhouse - sorry, a federal agency managing the pension fund risks of shaky companies, and for that executive to immediately allocate a greater proportion of the agency's funds into real estate despite expert advice to the contrary?

Has PBGC actually purchased any "real estate investment opportunities" offered by Broadway Partners?  The agency hasn't revealed any details of its post-September 2008 trading, so we can't be sure.

Given Mr. Millard's prior enthusiasm for expanding Broadway's "pool of investors", however, it wouldn't be shocking.

And it's hard to know how else to explain undertaking such a risky move at a time when the agency was appearing increasingly likely to be on the hook for billions of dollars.

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