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June 28 — The GAO will investigate the financially beleaguered Central States pension fund's investment decisions, an agency official confirmed to Bloomberg BNA.
The Government Accountability Office's decision to investigate the Central States, Southeast and Southwest Areas Pension Fund's investment decisions was in response to a request from 51 Democratic members of Congress, including 10 senators.
The lawmakers asked the GAO to probe the fund's investment decisions going back to 1982, when the fund came under the supervision of a court-ordered consent decree.
Charles Jeszeck, the GAO's director of education, workforce, and income security, told Bloomberg BNA June 28 that his agency expects to make staff assignments and begin work on the project soon.
The lawmakers said they hoped the GAO would determine if there was any wrongdoing that led to the fund's severe financial woes. The fund has projected it will be insolvent in 10 years or less.
The Treasury Department on May 6 rejected the fund's application to cut participants' benefits in an attempt to avoid insolvency.
The request was spearheaded by Ohio Rep. Marcy Kaptur (D-Ohio), who introduced legislation last year to address the fund's anticipated future insolvency.
Kaptur and Sen. Bernie Sanders (I-Vt.) introduced companion bills last year ( S. 1631, H.R. 2844) that call for the repeal of the Multiemployer Pension Reform Act's provisions that allow for pension benefit cuts by plans facing future insolvency.
The GAO is already investigating the Labor Department's supervision of the fund in response to a request by Sen. Charles Grassley (R-Iowa).Kaptur said in a news release announcing the request that she wanted the GAO to “get to the bottom of” allegations that the fund had questionable investments in “Iraqi banks in 2008, during a full-scale war” and in “unstable Russian banks, when the economy there is in shambles.” She also said she wants the GAO to look into the fund's $1.4 billion investment in risky mortgage-backed bonds “in the middle of the housing meltdown.”
Thomas C. Nyhan, the executive director and general counsel of the Central States fund, told Bloomberg BNA at the time of the lawmakers' request to the GAO that while he didn't see any reason for an investigation of the fund, he welcomed it as means to end “all of the groundless speculation.”
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