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 However, it is the position of BP that any such documents will be rescinded and not binding on anyone signing same."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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They've Lost Control

All President's men (and women).

Obama's Pay Czar will cut the salaries of top executives of the firms that have received the government bailout fund by whopping 90%. Can someone tell me why anyone should listen to him? He is not an elected official, only appointed by the President. What if you don't obey his orders? Is it a crime not to obey an appointed official? What would be the penalty?

• Pay Czar to Slash Compensation at Seven Firms (10/21/09 Wall Street Journal)

And the stock market tanked on the news, led by (hold your breath) financials.

U.S. dollar continued the descent, hit the 52-week low against Euro before it reversed hard upward as the stock market tanked. Not a peep from Geithner or Bernanke or their boss.

• Euro breaches $1.50 for first time in 14 months (10/21/09 AP)

Not surprisingly, crude oil and gold went higher.

• Oil hits $82 per barrel as dollar plunges (10/21/09 AP)


• Gold ends higher as dollar falls to new low versus euro (10/21/09 Market Watch)

House Democrats are calling "public option" "Medicare for Everyone" and hope everyone agrees that it's a good thing.

• House Dems want Medicare for everyone (10/21/09 The Hill)

And in Nancy Pelosi's mind, $900 billion is a chump change, and that is somehow supposed to reduce the deficit. (Hello, anybody up there?)

• House healthcare bill under $900 billion: Pelosi (10/20/09 Reuters)

In Iraq, U.S. soldiers are getting so bored they've started a book club. (Why can't they come back home?)

• U.S. troops in Iraq have time on hands (10/21/09 USA Today)

But over Afghanistan, even the Defense Secretary is getting impatient for Obama's slow decision. (No, Mr. Gates, President can't be bothered now. He's busy having a grand time partying at the White House.)

• Gates: U.S. Can't Wait on Afghan Election (10/20/09 CBS News)

Senator Lamar Alexander is fed up with the White House's "street-brawling" tactics against critics and opponents. (What else do you expect from Chicagoland?)

• Lamar Alexander to Barack Obama: No 'enemies list' (10/21/09 Politico)

Rasmussen's Daily Presidential Tracking Poll: Obama's ratings sink again, approval index nearing all-time low.

• Daily Presidential Tracking Poll (10/21/09 Rasmussen Report)

Republicans in House Committee of Ways and Means have this to say about Obama's $787 billion stimulus package (remember that one?). Let's just blame it on George Bush, shall we? To be fair, the administration has said the bulk of money will go out next year (just in time for the mid-term election, what a coincidence). Then I'm sure 6 million new jobs will be created to make up for the 7-month loss of 2.7 million jobs. (Not.)

• 7 Months After Stimulus 49 of 50 States Have Lost Jobs

Well, we just have to have another bigger and better stimulus. How about $1 trillion every quarter?

Or is it time to "wag the dog"?

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Obama's Pay Czar Working the Market

The stock market collapsed in the last hour of trading Wednesday when this news came:

3:26 PM The government will reportedly order deep pay cuts from the biggest bailout recipients in a plan the Treasury will announce in the next few days. The seven companies that got the most assistance will have to cut cash payouts to their top 25 execs by an average of 90% - to be replaced by stock that they'll be restricted from immediately selling - and cut their total compensation by 50%. [from Seeking Alpha Market Currents]

Dow Jones Industrial Average went from 20 points gain to 80 points loss (100 points reversal) in less than 20 minutes on a heavy volume.

If this isn't the blatant government intervention in the market, I don't know what is. Good job, Mr. Feinberg. Lucky you are not accountable to anyone but your President.

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Bank of America Ken Lewis to Get No Salary/Bonus for 09

so decided Obama's Pay Czar Kenneth Feinberg.

BofA's Ken Lewis to get no '09 salary, bonus
(10/15/09 AP via Yahoo Finance)

"NEW YORK (AP) -- Bank of America Corp.'s outgoing CEO, Ken Lewis, will get no salary or bonus for 2009 under an agreement with the government pay czar, who is scrutinizing compensation at bailed-out banks

"Kenneth Feinberg, the U.S. Treasury Department's special master for compensation, suggested that Lewis should get no pay for the year and Lewis agreed, Bank of America spokesman Robert Stickler said Thursday.

"In fact, Lewis will pay back about $1 million he has received so far out of a $1.5 million annual salary.

""He will write a check to the company," Stickler said.

"The bank spokesman also added that Lewis agreed to the proposal because he felt it was not in the bank's best interest "to get into a dispute with the paymaster.""

The paymaster?? A privately appointed administration's official with no Congressional oversight who is accountable to the president who appointed him is the paymaster whose words are final??
And the public is supposed to cheer for this?

I think it is grossly unfair to Mr. Ken Lewis, soon-to-depart CEO of Bank of America. Why has he been singled out like this? And not Mr. Vikram Pandit, CEO of Citibank, or Mr. John Stumpf, CEO of Wells Fargo? Mr. John Thain, CEO of Merrill Lynch, over which Ken Lewis was threatened by then-Treasury Secretary Hank Paulson to go forward with the purchase or else?

(And have we heard anything further about this story of a government official threatening a bank CEO? Noooo.)

Or how about the CEO of AIG, the company that has sucked in $180 billion of taxpayers' money?

Totally contrary to the treatment that the Pay Czar Feinberg has dished out to Mr. Lewis, the CEO of AIG, Mr. Robert Benmosche, appears to be in extremely good odor with Pay Czar:

AIG chief gets OK for $10.5 million pay package (10/6/09 CNN Money)

Pay Czar is just doing his job, I believe, of deciding who's been good and who's been bad, who's to be rewarded and who's to be punished, ALL ACCORDING TO HIS DISCRETION. Clearly, Mr. Benmosche is favored over Mr. Lewis, for reasons known only to Pay Czar.

What I don't quite understand is: why should anyone listen to him, even obey his orders?

What would happen if Bank of America protested against the unfair treatment of its CEO? Would Pay Czar direct labor unions and community organizers to picket Bank of America?

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US Government Wants to Control Private Sector Compensation

This noise has been getting louder and louder, particularly since the new administration came to town.

US government seeks to rein in executive pay (6/11/09 AP): [emphasis is mine]

"The Obama administration is taking a half-step toward taming U.S. executive pay. Some lawmakers prefer a fuller stride.

"Democrats on the House Financial Services Committee [that is "Fannie and Freddie are fundamentally sound" Barney Frank's committee] said Thursday the administration's efforts to hector the private sector into reining in executive pay might not go far enough.

"The administration contends that excessive compensation contributed to the U.S. financial crisis, but rejects direct intervention in corporate pay decisions."

Excessive compensation contributed to the U.S. financial crisis.... Did it? How about other "contributing" factors? The government's policies over the past 20 years - loose monetary policy, loose (non-existant) regulation of financial industry, misguided (in retrospect) housing policy, etc., and the Federal Reserve that enabled the government by providing cheap money and credit.

(High risk, high reward. They want to turn that into high risk low reward and low risk low reward. What fun is that?)

Oh, never mind. I forgot. It all happened before the current government came into existence. Never mind also that almost all Congressmen/women and Senators who voted for that highly unpopular bailout bill back in September 08 have been voted back in by the constituents with very short memory. It must be still different, because we have a new President.

Let's get back to the article:

"Gene Sperling, a counselor to Treasury Secretary Timothy Geithner, said administration guidelines call on all publicly held companies to link compensation to long-term performance, not short-term gains.

"We believe that compensation practices must be better aligned with long-term value and prudent risk management at all firms, and not just for the financial services industry," Sperling said."

Here we come. At all publicly held firms. Why should it be the government's business to force all publicly held companies to link compensation to long-term performance? Better aligned with long-term value? Whose long-term value? The firms', or the government's?

"While the administration has approached the issue with caution, a top Republican said the plans amounted to "incessant government intervention."

""The president cannot continue his heavy-handed meddling in the private sector and expect it to function, much less flourish," said Rep. Tom Price, chairman of the Republican Study Committee.

"Alabama Rep. Spencer Bachus, the top Republican on the committee, added: "We need to get government out of businesses.""

Republicans? What Republicans? Representative Tom Price doesn't seem to get it yet; the president may not want the private sector to function, much less flourish (see this post and link in the post). Why would he assume the president wants it to function and flourish?

And here comes the Pay Czar. All please rise. If you work for one of these companies - Citigroup Inc., Bank of America Corp., General Motors Corp., Chrysler LLC, American International Group Inc., GMAC LLC and Chrysler Financial - you'd better be nice. He can nullify your pay package that you and your employer duly agreed upon, if he thinks you are earning too much.

(Where are Fannie and Freddie? Shouldn't they be part of the seven?)

"The administration named Kenneth Feinberg, a lawyer who oversaw payments to families of Sept. 11, 2001 terrorist attack victims, as a "special master" with power to reject pay plans he deems excessive at the seven companies with the biggest injections of public money. Feinberg also would have authority to review compensation for the top 100 salaried employees at those companies."

Mr. Feinberg is also overseeing the payment from the fund created in the aftermath of Virginia Tech shooting in 2007.

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Car Czar, Cyber Czar, Pay Czar...Pay Czar??Cacophony of Presidential Czars

Particularly since the new administration swept in, there has been a proliferation of "czars". (Here I thought czars were Russian Emperors. Senator John McCain clearly thought so too.)

We apparently have:

Cyberspace Czar (Melissa Hathaway, frontrunner)
Technology Czar (Vivek Kundra)
Drug Czar (Gil Kerlikowske )
Copyright Czar (I have no idea if anyone got appointed. Here's petitioning for one.)
Climate Czar (Carol Browner)
Car Czar (Steven Rattner)
Healthcare Czar (Nancy-Ann DeParle)
WMD Czar (Gary Samore)
Education Czar (Arne Duncan)
Economic Czar (Lawrence Summers)
Urban & Housing Czar (Adolfo Carrion Jr.)
Bailout Czar (Herb Allison)
Stimulus Accountability Czar (Earl Devaney)
U.S. Border Czar (Alan Bersin)
Regulatory Czar (Cas Sunstein)
Great Lakes Czar (Cameron Davis)
Middle East Czar (Dennis Ross)
Af-Pak Czar (Richard Holbrooke)
Bank Czar (American Bankers Association is currently fighting against it.)
Performance Czar (She had to withdraw because of some tax problem...)
Guantanamo closure Czar (Daniel Fried)

The latest? Pay Czar.

White House Set to Appoint a Pay Czar (6/5/09 Wall Street Journal):

"The Obama administration plans to appoint a "Special Master for Compensation" to ensure that companies receiving federal bailout funds are abiding by executive-pay guidelines, according to people familiar with the matter.

"The administration is expected to name Kenneth Feinberg, who oversaw the federal government's compensation fund for victims of the Sept. 11, 2001, terrorist attacks, to act as a pay czar for the Treasury Department, these people said."

The Pay Czar is going to make sure those pesky TARP recipients comply with the pay guidelines set out by the Treasury.

These "czars" are all appointed by the President and placed above Cabinet level agencies. They are not confirmed by Congress, nor answerable to Congress. Bloomberg News sees a potential not just for confusion but for a constitutional crisis (read the article here).

(Who's paying their salaries?)

So what's next? Credit Card Czar, Insurance Czar, Junk Food Czar, Organic Food Czar, Arts Czar (I've seen the petition for this)? If Great Lakes can have a czar, why not Yosemite? Monterrey Bay?

Is there any area of our private life left, without being watched by the Czars?

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