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View Diary: White House plans to force BP to set aside money to pay damages (272 comments)

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  •  Recced, and here's a great quote (49+ / 0-)

    from an anonymous WH official for once:

    The White House official: "The President will make clear that he expects, and that if necessary will exercise his full legal authority to ensure, that BP sets aside the funds required to pay individuals and businesses damaged by this massive spill. And that those funds will be paid out under fair, efficient, and transparent procedures administered by an independent third-party panel established just for this purpose."

    http://www.politico.com/...

    This falls in line somewhat with one of the proposals floated by Center for American Progress, and it's good news.

    Claims for damages and lost revenues should be put under the authority of the U.S. Coast Guard National Pollution Funds Center. The scope of this disaster far exceeds the NPFC’s traditional resources, and other federal, state, and local claims processing resources must therefore be brought to bear, particularly from the Coast Guard’s sister agency FEMA.

    http://www.americanprogress.org/...

    Join Our Countdown To Health Reform! Project I work with Progressive Congress Action Fund, a 501(c)4.

    by slinkerwink on Sun Jun 13, 2010 at 09:32:25 AM PDT

    •  And the presidential authority to do is (57+ / 0-)

      already granted in the Oil Pollution Act of 1990 right here as pointed out by David Pettit. At the Natural Resources Defense Council Switchboard blog, a staff attorney, David Pettit, has posted language in the Clean Water Act, which was amended through the Oil Pollution Act of 1990, that appears clearly to vest the president with both the authority and the obligation to take the reins in a major oil spill where private actions have failed:

         (A) If a discharge, or a substantial threat of a discharge, of oil or a hazardous substance from a vessel, offshore facility, or onshore facility is of such a size or character as to be a substantial threat to the public health or welfare of the United States (including but not limited to fish, shellfish, wildlife, other natural resources, and the public and private beaches and shorelines of the United States), the President shall direct all Federal, State, and private actions to remove the discharge or to mitigate or prevent the threat of the discharge. (the rest of the Switchboard post)

      The Republicans may cry socialism, but that's what they do anyway, no matter what the President does, so it's time to stop being scared of what they say. And this is a good move by the White House, and one that is very welcome. It's a big, bold proactive step.

      I'd like to know more details about the third-party administrator to make sure it's not like the company BP hired to reduce payouts in claims.

      We need to support the President fully in this move because it's a good one.

      Join Our Countdown To Health Reform! Project I work with Progressive Congress Action Fund, a 501(c)4.

      by slinkerwink on Sun Jun 13, 2010 at 09:36:01 AM PDT

      [ Parent ]

      •  How much will be set aside? (8+ / 0-)

        I just read a few days ago that our British friends are upset at all the "bashing" of BP going on, and how crucial these regular dividends are to their pension funds.

        While I'm sympathetic to pensioners, we need to do a quick reality check here, if we're are going to be true to the ideal that BP pays for the clean-up and consequences.

        About how much are we talking about here?  

        So far we've heard of delays on paying about $60 million of business claims and some paltry clean up efforts so far.

        My suspicion is that any realistic long term, even partial whole-system cost estimates on these claims will quickly exceed BP's entire net-worth, and probably even total assets.

        Meaning that to pay these claims we will be talking about not only wiping out BP stockholders, but probably many of the debt, and bondholders as well.

        So is the total economic cost and impact of killing the Guld ecosystem?  And remember, we are not only talking about US claims, even though that's all we've read about so far.  Eventually, we will here about impacts on Mexicans, Central Americans, Carribean, and maybe even Venezualans as well, although, so far the favorable current directions for them head north.

        Plus, I heard one estimate that it will take over 300 years for nature to disolve this on it's own.

        When I heard of BP setting up a separate company to deal with the clean up, my first suspicion as a corporate strategist was that this might be a move to try to limit liability.

        Environmentalist and progressive economists need to start putting down some stakes in the ground.

        If BP pays all environmental and economic claims related to the spill, over the total system, and full life cycle (hundreds of years by most estimates) how much are we talking about - even rounded off to the nearest $50 billion?

        $3 billion?  $50 billion, $100 billion, $300 billion, or $1 trillion?

        I haven't check in more than a decades, but my guess is that BPs total book value is probably between $100 and 200 billion.  Total assets may be $400, to $500 billion.

        We need a legal global freeze on BP asset transfers, which we probably do not have the global legal framework to accomplish.

        The means is the ends in the process of becoming. - Mahatma Gandhi

        by HoundDog on Sun Jun 13, 2010 at 10:18:09 AM PDT

        [ Parent ]

        •  I'm not sure we have any authority for a "global" (7+ / 0-)

          freeze.  Their market vaslue is somewhere near $120 billion.

          The question will be how much Obama demands in escrow---and how?  Cash?  Assets as collateral?

          I think the request will be something like #15-20 billion.

          •  Thanks Phil S that sounds about right. (0+ / 0-)

            I just read in WSJ Market watch that their $10 billion/year was a 9% ROI implying a market valuation near yours.

            I would be happy with an initial request for $15-20 billion - a much more realistic number than the $5 billion that's been floating around.

            The Exxon Valdez claims were around $4.5 billion, I think.  And this spill is supposed to be at least 10 times as bad.

            Plus the confined nature of the Gulf and much higher property values, and greater fishing and tourism industry should make the per/barrel economic impact substantially greater than rurul, open ocean Alaska.

            Until I see a more compelling analysis, I'm going to take $4.5 * 10 * 2 or $90 billion.

            But, not including the uncountable cost of cancers, and invisable damage to the ecosystem I don't know how to count.

            The means is the ends in the process of becoming. - Mahatma Gandhi

            by HoundDog on Sun Jun 13, 2010 at 06:19:14 PM PDT

            [ Parent ]

        •  Not that much sympathy, here. (7+ / 0-)

          I just read a few days ago that our British friends are upset at all the "bashing" of BP going on, and how crucial these regular dividends are to their pension funds.

          If you invest a significant retirement fund on one stock, then you are a fool.  If you invest somebody else's retirement on one stock, then you are both a fool and a knave and should immediately have your house babyproofed lest you confuse electrical sockets for keyholes.  

          2009: Year of the Donkey. Let's not screw it up.

          by Yamaneko2 on Sun Jun 13, 2010 at 02:45:14 PM PDT

          [ Parent ]

          •  Blood money (2+ / 0-)
            Recommended by:
            HoundDog, Tropical Depression

            We all need to be aware of and take responsibility for the investments we make.

            Anyone funding oil companies should know exactly what they're doing and the risk they're putting us ALL at.

            Save the parrots: Drink shade-grown coffee!

            by oscarsmom on Sun Jun 13, 2010 at 02:53:51 PM PDT

            [ Parent ]

            •  And stockholder have to assume responsibility for (0+ / 0-)

              the quality of the management and policies they elect, and tolerate in their management.

              If BP is held accountable here, stockholders the world over, will start asking their managements more pointed questions about their maintainance, training, safety and other programmes.

              The means is the ends in the process of becoming. - Mahatma Gandhi

              by HoundDog on Sun Jun 13, 2010 at 06:21:57 PM PDT

              [ Parent ]

              •  Good point, but difficult. (1+ / 0-)
                Recommended by:
                HoundDog

                Investors with less than $10,000 to invest in stocks sometimes found it more lucrative to invest in stocks indirectly through a mutual fund or an investment club, since a 5% fee on the $10,000 beat choosing 30 stocks and paying commission on each.  Until 2008, it could even be believed that trained fund managers were better than Donkey Raffles [1] at picking stocks.  

                The problem is that the proxy to determine management usually devolves upon the mutual fund manager, who has been well-indoctrinated in the mores and norms of Wall Street.  There are a variety of ethical funds available, upon which I am not qualified to comment.

                I've heard about $7 trade services, but not enough to recommend for or against.  

                [1] A charming Midwest tradition in which a well-fed donkey is guided to a lot divided into a grid, then allowed to wander.  The square on the grid that receives the first donkey poop is the winner.  

                2009: Year of the Donkey. Let's not screw it up.

                by Yamaneko2 on Mon Jun 14, 2010 at 01:09:47 PM PDT

                [ Parent ]

          •  I hate it when this happens, Yameneko2 :-) (1+ / 0-)
            Recommended by:
            jds1978

            lest you confuse electrical sockets for keyholes.

            The means is the ends in the process of becoming. - Mahatma Gandhi

            by HoundDog on Sun Jun 13, 2010 at 06:20:17 PM PDT

            [ Parent ]

            •  Back when I had enough to invest... (0+ / 0-)

              Back when I had enough to invest during the Clinton years, the mantra among investment advisers was to split one's retirement investments between stocks, bonds and other vehicles.  The stocks portion was to contain multiple stocks;  those with only four digits to invest were guided to mutual funds with dozens of stocks in their basket.  

              The rule of thumb was that a prudent investor would have about (100 - age)% of investment funds in stocks.  By the time retirement hits at age 65, only 35% of funds should be in stocks.  

              So, using rules of prudence concocted during the Clinton speculative bubble, no 65-year-old should be more than 35% exposed in the stock market.  Of that 35%, prudence dictated a basket of stocks.  

              2009: Year of the Donkey. Let's not screw it up.

              by Yamaneko2 on Mon Jun 14, 2010 at 01:01:03 PM PDT

              [ Parent ]

        •  We need to stop the f*cking drilling (5+ / 0-)

          It's impossible for anyone to restore the environment to its pre-spill condition, no matter how much $$.  IMHO in that case, such actions need to be prohibited altogether.

          Save the parrots: Drink shade-grown coffee!

          by oscarsmom on Sun Jun 13, 2010 at 02:52:43 PM PDT

          [ Parent ]

      •  authority to do what? (3+ / 0-)
        Recommended by:
        chickeee, blueoasis, erush1345

        to direct?

        color me cynical but I fail to see exactly what 'full legal authority' means or how it will come to play out here

        "a lie that can no longer be challenged becomes a form of madness" -Debord

        by grollen on Sun Jun 13, 2010 at 12:40:49 PM PDT

        [ Parent ]

      •  And the lease (4+ / 0-)
        Recommended by:
        slinkerwink, neroden, oscarsmom, JayFromPA

        I wonder what the lease provides about BP's obligations in the event of a massive screw up.  They are on federal land, after all, pursuant to a contract.  The most insignificant lease, if decently written, will make sure the tenant or user owns up to any damage it causes.

    •  An anonymous source on Politico!??? (2+ / 0-)
      Recommended by:
      slinkerwink, blueoasis

      Why should anyone believe...

      Never mind, I was channeling someone else for a moment. Sorry.

      Until we break the corporate virtual monopoly on what we hear and see, we keep losing, don't matter what we do.

      by Jim P on Sun Jun 13, 2010 at 02:46:10 PM PDT

      [ Parent ]

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