The Senate Health, Education, Labor and Pensions Committee held a hearing on the nomination of R. Alexander Acosta to be the next Labor secretary earlier this month.
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One of the shocking moments in the hearing came when Sen. Al Franken, D-Minn., asked Acosta about the Labor secretary’s role as the head of the Pension Benefit Guaranty Corp.
Franken pointed out that the looming failure of the Central States retirement fund could affect $60 billion in pension obligations, and about 20,000 Minnesota residents.
“One of the largest pension crises in American history could land on your desk,” Franken said.
Franken asked Acosta to tell him how he’d solve that crisis.
Acosta, who got the U.S. Justice Department into the business of fighting Medicare fraud in Miami, and who seemed notably more inclined than other recent cabinet secretary nominees to give concrete answers to the hearing questions asked, declined to say what he would do about the possible failure of the Central States fund and other multi-employer pension funds.
“I have not proposed a plan,” Acosta said. “I have not seen a plan proposed, that has worked, in the past decade.”
The pension failure crisis is likely to be a $2 trillion crisis, Acosta said.
“This is a fundamental issue we’ve got to think about,” Acosta said.
Both the Executive Branch and Congress have to join together to come up with a solution, he said.
On the one hand: Acosta’s answer showed that he both understands the nature of the crisis and has the commonsense to know that he doesn’t have a simple solution.
On the other hand: The nature of that crisis hints at why so many of the post Dodd-Frank efforts to keep anything bad from happening to investors ever again, and to make sure retirement investment advisors’ interests first, seem so wildly off the mark.