PBGC Stakes Claim in Bankruptcy Case
By Amir Efrati and Jeffrey McCracken
The Wall Street Journal
Wednesday, January 14, 2009
The Pension Benefit Guaranty Corp., a federal agency that
insures private pensions, identified itself as a creditor in the
liquidation of Bernard Madoff's firm, suggesting it is preparing
for bankruptcies by companies in the wake of an alleged $50
billion Ponzi scheme.
The agency, which protects the pensions of nearly 44 million U.S. workers and retirees, on Tuesday joined a Manhattan
bankruptcy-court proceeding involving the Madoff firm, which is
being liquidated by a court-appointed trustee.
"The agency has a responsibility to carry out its mission to
protect pension plans in the event of a bankruptcy," said Jeff
Speicher, a spokesman for the agency. He added: "The
PBGC insures almost 30,000 pension plans. One or more of
those plans may be exposed to losses as a result of the Madoff
The agency said it is preparing to take over a pension plan
sponsored by a small company that manages residential buildings
in Manhattan and whose employees include doormen.
It is also looking into pension plans of charities whose
endowments were invested with Mr. Madoff.
"Our preliminary review has given us serious concern that those
pensions may also have been fully invested in Madoff," said
Charles Millard, the agency's director. "We are also
concerned with several dozen union pension plans in upstate
New York" that reportedly have exposure
to the Madoff firm, he said.
The agency was created in 1974 to provide support to people
whose pension plans are terminated "without sufficient funds to
pay all benefits," such as when businesses go out of business,
according to its Web site. The agency is funded through
its own investments as well as insurance premiums paid by
companies whose plans it protects, among other things.
Any spillover effect for pensions from the Madoff scandal would
come at inopportune time for the PBGC. The agency
announced in November an $11.15 billion deficit for fiscal year
2008, down $2.9 billion from its $14 billion shortfall last
Write to Amir Efrati at
email@example.com and Jeffrey McCracken at