Thursday, June 17, 2010

Ranking Republican Apologizes to BP's CEO

Good for him.

Republican apologizes to BP for 'shakedown' by government
(6/17/2010 The Hill)

"A top Republican lawmaker apologized to BP on Thursday for what he said was a "shakedown" by the government of the oil company in forcing it to create a $20 billion fund to pay out damages resulting from the Gulf of Mexico oil spill.

"“I am ashamed of what happened in the White House yesterday," said Rep. Joe Barton (R-Texas), apologizing to the oil company.

"Barton, the ranking member of the House Energy and Commerce, said that the relief fund BP created under pressure from President Barack Obama was, in essence, a "slush fund.""

The "thin-skinned, controlling" White House, along with the Congressional leaders of both GOP and Dems, immediately attacks Barton by mischaracterizing his remark. The Hill article continues:

"White House press secretary Robert Gibbs called on both parties to "repudiate" Barton's comments.

“What is shameful is that Joe Barton seems to have more concern for big corporations that caused this disaster than the fishermen, small business owners and communities whose lives have been devastated by the destruction," he said in a statement.

"Congressman Barton may think that a fund to compensate these Americans is a ‘tragedy’, but most Americans know that the real tragedy is what the men and women of the Gulf Coast are going through right now," Gibbs said."

Barton is not saying any of that. He is saying $20 billion escrow fund that BP was made to agree on by the White House amounts to nothing but a "slush fund" for the administration. If anyone thinks the money, all of it or close to it, will go to "fishermen, small business owners and communities", he/she is so naive.

Now let's look at what this $20 billion escrow fund is about. Below are some of the salient points from the announcement from the White House, with my interpretation:

- An independent claims facility will be created to process the claims, will be administered by none other than Kenneth Feinberg, Obama's Pay Czar who has been dictating the Wall Street pay in a peculiarly inconsistent manner (stripping Bank of America's Ken Lewis' salary to zero while giving the CEO of AIG, of all firms, more than $10 billion, and the Vampire Squid is free to pay its executives any amount they deserve for a great financial firm like theirs.).

- The facility will develop standards for claims. The facility is for "small people" (individuals and businesses) who are affected by the oil spill; local, state, tribal, and federal government claims will continue to be handled directly by BP. So the governments' claims are handled outside this escrow fund facility and directly by BP, assuring the speedy payout. (Good luck, "small people", filing documents after documents going through the process fighting the petty bureaucrats.)

- A panel of three judges will be appointed to hear appeals.

- BP will contribute $20 billion over 4 years to the escrow account ($5 billion each year). BP will set aside $20 billion US assets. In other words, the escrow account is secured by BP's real assets. If BP fails to contribute funds, therefore, the government will seize the collateral.

- $20 billion is not a floor, nor a ceiling on liabilities. So the amount BP will be forced to pay is essentially unlimited.

- BP will voluntarily contribute $100 million to support unemployed oil rig workers, who were made unemployed by the moratorium on drilling imposed by the government. Those jobs may not come back, as oil rigs are in demand elsewhere in the world, notably in Brazil. Oil companies are paying half a million dollars a day for a deepwater oil rig. They can't afford to have them floating idle.

It is a theft, from a private business, in the name of "small people", to empower and enrich the bureaucracy of the government.

BP has caused the world-class disaster; magnitude of which we haven't figure out yet. So the government butts in, and profits as go-between.

Never waste a crisis.


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