Joshua Gotbaum, recently nominated by President Obama to head the Pension Benefit Guaranty Corporation, has big challenges awaiting him.
First, there is the debt: The government-backed insurance fund reports a deficit of $22 billion, double the deficit of the year before. Some analysts predict that the corporation will need a bailout.
Then there are the businesses that may have abused the program. According to a report to be released today, companies that turned their pension plans over to the fund paid their top executives millions of dollars in retirement and severance benefits.
The report was requested by the House Committee on Education and Labor, which is investigating the government corporation’s problems.
Finally, there is a shady legacy. The last director of the fund, Charles Millard, left amidst allegations that he had improper contacts with financial firms wanting to manage fund assets.
Gotbaum, a partner at Blue Wolf Capital Management, has significant experience in working with distressed people and finances. After serving as an assistant secretary in both the Defense and Treasury departments, he was CEO of the September 11th Fund, a charity that helped 9-11 victims and their families.
He was also trustee for the Hawaiian Airlines bankruptcy.
He is a member of a storied family. His father, Victor Gotbaum, was a prominent union leader at AFSCME. His stepmother, Betsy Gotbaum, is the New York City public advocate and former president of the New-York Historical Society.
The family suffered tragedy in 2007, when Gotbaum’s sister-in-law died while in custody at the Phoenix international airport. On her way to an addiction-treatment clinic, Carol Gotbaum had been arrested after a confrontation with police. The medical examiner later ruled that she had accidentally strangled herself with her shackles.
The city of Phoenix last month agreed to a $250,000 settlement in a negligence lawsuit filed by her three young children.
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