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Breaking News: BP agrees to set up $20 Billion Escrow Fund


By Kelly Thomas - Posted on 16 June 2010

Link from New York Times.

After speculation that the amount might be much lower, it looks like President Obama may be "kicking butt" at least on some important items in his meeting with BP. AP is reporting BP has tentatively (key word tentatively) agreed to the $20 Billion escrow figure. We know the "devil is in the details" and those will be coming soon, but this appears to be a positive development.

WASHINGTON — The White House and BP tentatively agreed on Wednesday that the oil giant would create a $20 billion fund to pay claims for the worst oil spill in American history. The fund will be independently run by Kenneth Feinberg, the mediator who oversaw the 9/11 victims compensation fund, according to two people familiar with the deliberations.

Tony Hayward, BP’s chief executive, left, and the chairman of BP’s board, Carl-Henric Svanberg, center, walked with a White House staff member as they arrived for a meeting with President Obama on Wednesday.

The agreement was not final and was still being negotiated when President Obama and his top advisers met Wednesday morning with BP’s top executives and lawyers. The preliminary terms would give BP several years to deposit the full amount into the fund so it could better manage cash flow, maintain its financial viability and not scare off investors.

The talks have been complicated by the fact that BP’s ultimate liabilities for the cleanup and lost business are unknowable since the two-month-old leak of its well in the Gulf of Mexico could be spewing oil for months more. To date, BP has spent more than $1 billion on containment, cleanup and claims from the Coast Guard, fishermen, oil workers and other businesses from Louisiana to Florida.

*** UPDATE *** NBC's Chuck Todd adds: Administration officials confirm that reports about BP putting $20 billion in escrow are true, and that Ken Feinberg, who ran the 9/11 victims' fund, will be the third party overseeing the distribution of these funds.

However, administration officials caution that the rules governing how the government goes back to BP for more money -- if needed -- are what's being negotiated now.

 

 

Thank you BP! From a "small" person. :(
Aren't they the most arrogant, condescending people you have ever seen?  Did you watch Hayward and Shuttles in the background?  The looks on their faces said it all.

Did you watch Hayward and Shuttles in the background?

Yes, those are the gnats that keep the wheels turning for Svanberg.

Restaurant owners Regina and Matt Shipp watch President Barack Obama's speech about the Gulf oil spill as they sit in their nearly empty dining room in their restaurant in Orange Beach, Ala. on Tuesday, June 15, 2010. The Shipp's have filed claims with BP for some $33,000 in lost revenues because of the oil spill. So far, they have been paid $5,000.

Shipp's Harbour Grill

They moved their family from Mobile and opened their dockside dining room in Oct. 2009.

They've lost almost $57,000 since the spill.

"This time of year, we would serve four to five hundred people," says Regina.

And since the spill?

"Less than half," says her husband Matt. "Last night, we probably had fifty or sixty people last night. We should have been doing several hundred."

Fearing the numbers would only get worse, Matt and Regina Shipp have filed a claim with BP on April 30.

So far they've received only one $5,000 check from BP - less than half of one month's rent on the restaurant.

To stay afloat, they've had to let five employees go and cut the rest of their staff down to two days a week.

(Source)

The hardship that the Gulf local residences are experiencing is beyond words. I can see why Obama is highly concerned.

BP Chairman Carl-Henric Svanberg told reporters in Washington today: "I hear comments sometimes that large oil companies are greedy companies or don't care, but that is not the case with BP. We care about the small people."
Although it's hard for me to defend BP in any way, this may have been a language barrier issue (he is Swedish.) I'm guessing he was trying to translate caring about the "little guy" and really screwed it up! But, then again, wouldn't he have others around him proofread the remarks before saying them? That was a prepared statement, wasn't it? Well, it certainly adds insult to injury, mistake or not!
I give the President high marks today and that negates my disappointment with his speech. Actions and results speak louder than words.

Okay I'll give him that... a simple mistake in translation? I am sure he was meaning "Little Guy". Not being American, the terminology can be confusing?

and

I gave the President a C last nite... today I give him an A+

I don't think Svanberg meant to demean any Americans by his use of the phrase 'small people.' It was probably a bad choice of words, due to translations.  In light of the apology he was issuing at the time, he would hardly take a chance on being insulting or condescending.  BUT...

I'd been watching Hayward and Suttles, standing behind him, and their faces clearly indicated their disdain.  Suttles' face, as usual, said "Who do these people, including this Obama person, think they are? "  While Hayward's face said "Must we do this?  I want my life back."  They clearly think all non-executive types are "the small people"....and no translation problems with them. 

It appeared to me that Hayward had a nervous twitch.

Totally with you on Svanberg. We are not "defending" BP by identifying the 'small people' comment as a total non-story.  NBC nightly news pumped it like Hannity going after Obama's "lipstick on a pig" remark during the campaign --and Obama is generally credited with having a reasonable command of political nuance in English.

Svanberg, acc. to Wikipedia (which is usually very good on basic bio info), got his entire education in Sweden.  English is not his first language.  The "big company"  "small people" dichotomy, while not idiomatically clear, is not far removed from the "Wall Street-Main Street" paradigm that every political hack from Fox News to MSNBC to Obama to McConnell uses on practically a daily basis.

The guy spoke in English to Americans.  Very few American business people -- let's not even get into tourists -- do business overseas in any language other than English.   For decades or more the rest of the world has had to put up with us going to their countries with our phrase books and tapes, saying  things like, "Lord Mayor, it is a pleasure to be in your toilet"  and "We want to see the Eiffel Tower. Where is the River Swine?"

Ok... BP's  PR sucks. It SHOULD suck. I would be creeped out if BP was actually GOOD at this. 

There are real issues out there.  Somebody from BP screwing up our language-- no more outrageously than many of us do oursevles -- ain't one of them.

 

 

Here are some more facts I have not heard on the news. 

FACT SHEET: Claims and Escrow

ESCROW ACCOUNT

BP has agreed to contribute $20 billion over a four-year period at a rate of $5 billion per year, including $5 billion within 2010.  BP will provide assurance for these commitments by setting aside $20 billion in U.S. assets.

VOLUNTARY CONTRIBUTION FOR RIG WORKERS

BP will contribute to a foundation $100 million to support unemployed oil rig workers.

The Administration’s May legislative proposal would create a new program of unemployment assistance, modeled after the Disaster Unemployment Assistance Program, to provide benefits to workers who lose their jobs as a result of a spill of national significance.

ENVIRONMENTAL AND HEALTH MONITORING

BP has previously committed $500 million for the ten-year Gulf of Mexico Research Initiative to improve understanding of the impacts of and ways to mitigate oil and gas pollution.

As a part of this initiative, BP will work with governors, and state and local environmental and health authorities to design the long-term monitoring program to assure the environmental and public health of the Gulf Region.

I've been on Sen. Leahy's mailing list for awhile, and he's sponsoring the ECEA act, Environmental Crimes Enforcement Act to make restitution for violations of the Clean Water Act mandatory and increase criminal sentences for violators. If one supports it, the website will generate email to your members of Congress.  I know my Rep. John Kline won't support it, but I think Senators Franken and Klobuchar will, particularly as they're both on the Judiciary Committee with Leahy.   http://ga3.org/campaign/ecea/ 

Michele Bachmann strikes again!  Can you believe that she opposes the escrow account stating that its more government control and will lead to a redistribution of wealth.  http://tpmdc.talkingpointsmemo.com/2010/06/bachmann-blasts-redistribution-of-wealth-escrow-fund-says-bp-shouldnt-be-chumps.php

I think she's given Tarryl Clark her best compaign ad.  Bachmann supports BP and not the people in the Gulf! 

But it's okay to "redistribute" our tax dollars to farm subsidies ($250,000) for her family farm. The check is in the mail, Rep. Bachmann.
speaking of american idioms, can you say "One trick pony"?

Oh, Bachman, what a joke!!!

From this lawyers perspective, what President Obama accomplished today is a pretty big deal.

The 20 billion fund should be viewed as a huge accomplishment for Obama. He had no actual power to compel that aside from moral suasion and the threat of having an unhappy president. Legally, BP could have just waited for the lawsuits and drawn the whole thing out for years. As a lawyer, I find it a unique and mind-boggling accomplishment.

It reminds me a little of something that happened during the Hurrican Rita evacuation. It was going to slowly and endangering the evacuees. Houston Mayor Bill White got on the phone to the Texas Department of Highways. He said, "make all the lanes of I.H. 45 one way north for the first hundred miles from the coast--the southbound traffic can find another route." He had no power to order that. But the officials just complied. He acted like a man in charge.

So, Obama comes along, says "set up a 20 billion fund, have an independent administrator in charge, and start paying damages." He had no power to order that. But BP said, "yes, sir." And it was done.

We shouldn't be nitpicking the particulars of it.

 

What astonishes me most about Bachman, frankly, is that she is from Minneosta. Forgive my regional chauvinism but I associate her dimwittedness with the politics of ... ahem... some other states.

I did my graduate work in Minnesota and met my wife in Minneapolis -- she being the lone moderate-to-liberal in an otherwise self-admitted, STAUNCHLY conservative family. We were married in upstate MN.  My in-laws, whom I adore notwithstanding four decades of political duking it out at holidays,  are the quintessential rural Minnesota conservatives: morally  unnuanced but INTELLECTUALLY demanding.  They have no patience with morons, left-middle-or right.

Minnesota has always prided itself on having smart, principled politicians across the board in greater percentages than many other states.  This isn't to say that no one in Minneosta ever had a dalliance, but there are reasons why you don't associate "Reality" Rod Blagojevich and "Wide Stance" Larry Craig types with Minnesota. Politics is not a side show and Minnesota politicians are not circus clowns.  (Look how patently UN clownish Al Franken has been from his campaign through his first year of service.)

So how does one begin to explain Bachman? I find it impossible to get my head around the fact that Minnesotans, with a huge tradition in valuing and investing in education, put up with Bachman's brainlessness. My family in upstate Minnesota is as conservative as she is and there is no way they would vote for her. 

Bachman's political existence flies in the face of what I consider to be the most admirable qualities I saw living in (and "marrying into") Minnesota: thoughtfulness, self-respect, and self-restraint. Bachman???

Bachman may represent a particular district in Minnesota but her legal place of residence is the moon.

Minnesota has always prided itself on having smart, principled politicians across the board

Minnesota politicians are not circus clowns

Eugene McCarthy, Jesse Ventura, Tim Pawlenty, Michelle Bachman..........these are just the ones I know off the top of my head, and I live far, far away from Minnesota.

What I'm saying is we all have our circus clowns.  But when we have first hand knowledge of a state's politicians, we also know the positive within that state.  The rest of the world sees the idiots. ;-)  Minnesota is no different.

 

That's a fair call on the generalities. Jesse Ventura started out as a professional wrestler/media clown and  may be one now as a tv personality but was a serious minded town or city councilman and then a serious governor -- not necessarily terrific but not a headline whore.McCarthy and Pawlenty were/are serious minded people, as were standard bearers Hubert Humphrey and Walter Mondale. Bachman is rare  among Minnesota "colorful figures" whose personalities overwhelm their public services.  I certainly don't believe Minnesota is unique in this, but their politics has historically had a certain character to which Bachman stands as something of an anomaly, to say nothing of an embarrassment.

Bachmann represents a gerrymandered district which includes the most conservative people in the state.  It includes Stearns County (city of St. Cloud) which is a prime area for tea partiers and racist incidents.

The Democratic Party in MN is infamous for endorsing lousy candidates.  If they had found someone like Tim Walz (a moderate Dem who represents the somewhat conservative 1st Dist in the southern part of the state) in 2006, she probably wouldn't have been elected then.  Instead they chose Patty Wetterling who's a nice lady but primarily known as a victim when her 11 year old son was tragically lost through a kidnapping in 1989,  In 2008 they chose Elwyn Tinklenberg, not a savvy politician either.  This year they chose Tarryl Clark who is ready to battle Michele so there is some hope.  I also wasn't pleased when the Dems endorsed Margaret Kelliher for governor this year, speaker of the ineffective House.  I think they would've had a better candidate in Mayor R.T. Rybak of Minneapolis who had done a good job with the fiscal restraints in recent years. 

I'm saddened that the Republican Party in MN has purged itself of all moderates because in the past there was a long tradition of cooperation between the two parties, and many people voted for people of both parties.  In 1990 we ousted the two Rudys (Perpich as governor and Boschwitz as senator) and many people voted for both Carlson-R  as governor and Wellstone=D as senator.  People such as former Senator Dave Durenberger (now an Independent), former governors Quie and Carlson, former Rep. Jim Ramstad have little or nothing to do with the current Republican Party.

I am very satisfied with the work Al Franken is doing.  He is very conscientious and hasn't missed a single vote in the Senate.  I get the feeling that Sen. Klobuchar waits to check the political wind before she makes a decision, but it is probably a good idea that she positions herself as a moderate Democrat while Franken is the liberal one.  We wouldn't be able to keep two liberal Democrats in office. 

Thanks for the update, Minngirl.  I do miss the state -- get back for family gatherings now and then. It was a joy to live and go to school in Minneosta... a chilly joy but a joy.
That's why one should always visit us in summer or fall.  We had some storms and tornadoes in the central part of the state yesterday, but today it's nice, 83 and sunny.

So glad to see you post...I've been worried about you.

83 soundss like heaven...it's 97 and humid, humid, humid here.

From CNN. Carville: Obama Now Getting it Right

Source: AP

Mississippi's governor said Wednesday he's not sure the federal government should have made BP put $20 billion into escrow to compensate victims of the Gulf of Mexico oil spill because the company needs it to drill more wells and make money so it can pay up.

******

Is he really that stupid? A good part of that money is for the victims in his state. The company's assets are worth over $200 billion.

Oh well, Barbour is just reinforcing once again that Lincoln was right when he said,

"Tis better to remain silent and be thought a fool than to speak and remove all doubt."

I'm sure that the fact that BP contributed 1.8 M to Barbour's campaign chest has nothing to do with it!  I see other Republicans are complaining about it too;  Obama is using Chicago thug techniques.

I think this started when they saw that this might be a big success for the president so there's only one response;  ATTACK! 

Is he really that stupid?

YES

I have very large reservations about the $20 billion escrow account. While it is a step in the right direction, I think ultimate damages to the environment, individuals and businesses will dwarf this figure. Will BP step back up with more $$$ when claims begin to exceed this figure? I seriously doubt it.

Even though this account will be managed by, and payment decisions made by impartial people, can individuals and businesses affected by the spill request reimbursement, receive it; then later on request additional funds as more damages are discovered? I doubt it. BP will probably set, as a condition of reimbursement, that those who are paid will have to sign a waiver agreeing that the payment will constitute payment in full, and agree not to later file suit against the company over the spill, and its after-effects.    

There's ALWAYS a catch.

I still think $20 billion is not going to be nearly enough to cover the damages--- $1 trillion might be a more reasonable figure. But, of course, there is no way BP would agree to set aside $1 trillion in an escrow account to pay for the damage that their own negligence caused. 

 

President Obama made clear that the $20 billion was not a cap and people will still be free to sue, etc. I've heard (from some lawyers) that the deal leaves very little for BP and they were simply backed in a corner. I'll see if I can find more but I really don't think there is much room for loop holes, expecially with the pollution acts we now have in place and the expectation that the $75 million cap will be lifted. They also can't run away from the criminal lawsuits they will face since 9 people died.

I hope you're right, Kelly. I am just not sure I trust the Obama administration on this; and for d***** sure I don't trust BP and the bevy of lawyers looking out for their interests, and not giving a hoot about anything else.

Let's put it this way; I will have to see it to believe it. Maybe I am just too cynical.

 

If Republicans are calling it a "Chicago style shakedown" and even expressing frustration at BP for agreeing to it, I find that somewhat comforting that it might have some teeth.

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