BP's $20 Billion "Escrow Fund" May Not Be What We've Been Told

If this was a "shakedown" by Obama, it was more like BP begging "Oh please shake me down, I'll give you all the money you want. It will make you look good, too. A strong leader. But in exchange..."

The Wall Street Journal article yesterday ("Feinberg Ramps Up $20 Billion Compensation Fund" by Neil King Jr., 6/21/2010) says the following about the $20 billion escrow account that Obama demanded and has been established, to be managed by Obama's Pay Czar Kenneth Feinberg:

- As soon as the Deepwater Horizon rig sank in April, Feinberg started to plan for administering the claims.

- It was BP who asked Feinberg to work for them in administering the claims two weeks ago.

- Last week Obama and BP announced the establishment of the escrow fund, without Congressional approval, without even the presidential executive order.

- Feinberg will have the sole and complete latitude to decide who will get how much.

As with other Czars surrounding Obama, Pay Czar is not accountable to Congress or the general public. He's only answerable to Obama, who has told him to "get the payment out quickly."

The article ends with indications on how Mr. Feinberg intends to proceed:

"In the end, one aim of the fund—and a prime reason BP agreed to it—will be to minimize lawsuits against the company. To do that, Mr. Feinberg will offer big lump-sum payments to workers and businesses as an enticement to stay out of court.

""At some point, I will have to make an offer—'You take this amount in full satisfaction of your claim, but only if you waive your right to future litigation,'" Mr. Feinberg said. "And if I package it right, people will see that it makes no sense to fight it out in court."" [Emphasis is mine.]

So the administration (not even the federal government) unilaterally decided to take the responsibility of compensating the oil spill victims from BP and assign it to a presidential appointee who is not accountable to Congress and who will have the sole power to decide who gets what, and the whole point of the exercise is to shield BP from lawsuits from the 'small people'.

That explains why investors have been buying BP's shares and bonds. They think the downside is covered by the administration.

Some 'small people' on a stock message board had an excellent idea the other day: Let's all move to the Gulf states immediately, and start filing claims!

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