Obama's Pay Czar Is Paid by BP, and He Manages $20 billion BP Oil Spill Escrow Fund

Talk about "conflict of interest".

I have written about Kenneth Feinberg, President Obama's Pay Czar who has been put in charge of dispensing the BP's $20 billion escrow fund (which is still EMPTY, by the way), and wondered aloud why he seems to be more accommodating to BP than to the 'small people'.

Here's one guess: it is because he draws his salary from BP.

In the July 19, 2010 article, AP writer Frederic J. Frommer reports on the speech that Feinberg gave at the Economic Club of Washington D.C., in which Feinberg encouraged people in the Gulf region who have been negatively affected by the BP oil spill to settle. In the very last sentence, the writer throws in a piece of information I don't think I've seen anywhere else:

"Feinberg, who is being paid by BP, declined to provide his salary. "That's something between me and BP," he said."

Ummm, excuse me?

Mr. Feinberg, as Obama's Pay Czar ("Special Master for Executive Compensation", if you prefer), is being paid by the Treasury Department for his work of "regulating" executive compensation at big Wall Street banks and non-bank financial companies like AIG. (He doesn't seem to do any of that except for a few isolated cases, but that is for my later post.)

He was appointed by Obama to this Pay Czar position, in which he is only answerable to the president. But he has to be paid somehow for his service. So what did the administration do? Have Timmy Geithner hire him at the Treasury Department, of course. (That's how political appointees at the White House are paid, by the way - by creating 'positions' in the executive branch departments and agencies even if they only work for the White House.)

Mr. Feinberg's partner in his law office, Mr. Michael Rozen, has also been active in promoting the escrow fund. Wonder if Mr. Rosen also draws his salary from BP.

(H/T dovp2549)

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Feinberg Wants to Protect BP, Not "Small People"

Or so it seems.

Obama's Pay Czar cum Oil Spill Escrow Fund Czar Kenneth Feinberg wants to subtract money that Gulf coast fishermen earn by working on the cleanup effort from any future damage claims against BP.

Dahr Jamail of Truthout reports:

BP's Scheme to Swindle the "Small People" (Dahr Jamail, 7/19/2010 Truthout)

"Gulf Coast fishermen and others with lost income claims against BP are outraged by a recent announcement that the $20 billion government-administered claim fund will subtract money they earn by working on the cleanup effort from any future damage claims against BP. This move, according to lawyers in Louisiana working on behalf of Louisiana fishermen and others affected by the BP oil disaster, contradicts an earlier BP statement in which the company promised it would do no such thing.

"Kenneth Feinberg, who was appointed by President Obama as the independent administrator of the Gulf Claims Facility for the $20 billion BP Deepwater Horizon oil disaster compensation fund, said yesterday that the wages earned by people working on BP's cleanup will be deducted from their claims against the company.

"He said the fund is designed to compensate fishermen and others for their lost income, and if BP is already paying someone to help skim oil and perform other cleanup work, those wages will be subtracted from the amount they're eligible to claim from the fund."

The article title is a bit misleading, because this would be news to BP, whose lawyer had formally written to the attorneys for cases pending in Lousiana:

"A.T. Chenault, a lawyer representing BP, responded in writing via letter stating, "We have no personal knowledge of the presentation of a Voluntary Waiver and Release to numerous people from Plaquemines Parish in Venice, Louisiana. However, it is the position of BP that any such documents will be rescinded and not binding on anyone signing same."

"Lastly, we confirm that BP will not offset payments to vessel owners or other volunteers against claims they might have," wrote Cheault, who is with the firm Fowler, Rodriguez, Valdes-Fauli." [The entire article at the link above.]

This blog already raised the question as to exactly whose interest Mr. Feinberg intends to represent in dispensing this fund.

But other questions beg answers, too.

1. Has anyone seen the actual signed agreement for the escrow fund?

2. What is in the agreement, exactly?

3. Who signed the agreement? BP and ....? Obama?

4. If Obama, who (or what) gave him the authority to demand and sign an agreement like that?

5. Where was Congress?

6. Where is Congress now?

7. Why isn't anyone demanding to know what is in the agreement?

8. Why isn't anyone asking why this private attorney (Feinberg) has any authority to dispense this fund? Just because Obama said so?

9. Is Mr. Feinberg's law firm set to benefit in any way? If so, in what way? (The article does mention that the attorneys with cases in Louisiana court are planning to meet Mr. Feinberg's law partner Michael K. Rozen.)

Interestingly, Mr. Rozen was seen speaking to attorneys, insurance companies, government agencies and answering questions in Oil in the Gulf Conference, explaining this escrow fund. He was addressing himself as "we", indicating he is a part of the official team. (So if Obama appoints Feinberg, his partner is also automatically in??)

This escrow fund (if there's any money in it) smells more and more like the settlement of a big class action lawsuit, except the settlement is already at hand without the lawsuit. Just like any class action lawsuit settlement, likely winners are the attorneys representing the 'small people' who will receive pittance. If that.

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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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