The Financial Body Count: Pension Risk Increases

In 2009 alone more than 120 banks have failed. We've also seen the collapse of large financial institutions like Fannie Mae (FNM), Freddie Mac (FRE), Lehman Brothers (LEHMQ.PK), Bear Stearns. According to the most recent reports, it appears that the Federal Housing Administration is on the ropes, and GMAC is currently seeking its fourth (or, perhaps its fifth or sixth) bailout. But that's not the end of it. There's plenty of terminal cases still wandering the halls of the U.S. economy. In "Weak Companies Raise Risk for U.S. Pension Agency," Reuters gives us the latest on another one of them.

Weakness in the auto and airline industries, as well as retail and service sectors, has more than tripled the potential risk to the U.S. pension insurance system.

The Pension Benefit Guaranty Corporation (PBGC) on Friday said its potential exposure to future pension losses from financially weak companies had increased to about $168 billion in fiscal 2009 from $47 billion a year earlier.

It also reported a doubling of its deficit in the year that ended September 30, and said future shortfalls from retirement account defaults could be worse than forecast.

Comments

[Robert Jung:]

It seems to me that one can only conclude that the Fed "must" inflate asset values.

Nov 16 08:49 AM

[john s. gordon:]

more zombies & counting.
> jack

Nov 16 09:35 AM

[Old Trader:]

I've been wondering how long it would take for the pension issue to appear on various radar screens. As Robert Jung points out above, this places added pressure on the Fed, et al. to keep the floodgates of liquidity open.

Nov 16 10:09 AM

[granger:]

right or wrong, I hope they stop, it is time to let the chips fall where they may, it is time to stop burdening everyone with future liabilities


On Nov 16 08:49 AM Robert Jung wrote:

> It seems to me that one can only conclude that the Fed "must" inflate
> asset values.

Nov 17 05:16 AM