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BP Agrees To Place $20 Billion In Escrow
WASHINGTON — BP tentatively agreed on Wednesday to 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.
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. Its 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 well be
spewing some 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.
The negotiations since late last week have been closely held given the
market sensitivity for BP, whose stock has lost about half its value.
BP’s next dividend for shareholders is another issue on the table. Some
members of Congress have called for blocking any dividend payments,
though the legality of such action is in dispute, or for putting the
dividend in another escrow account pending payment of claims to
victims. Either option would be problematic for many institutional
investors and pension funds with stock in BP.
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Yeah, that's super. Just plug the damn hole.
reload the shorts!!!!
you recon? am considering but bit late to the party or has it not started yet properly?
I shit on their $20B.
Die BP Die, has the same nice ring to it, that Die Lehman Die did in the summer of 08.
Just great and to be administered by Bam's newly appointed Oil Slick!!!
You mean Bammy's newly appointed Oil Czar?
yes, Slick Oil...lol
Here's my concern. Kenneth Feinberg ran the 9/11 victims fund as a "hush" fund. Meaning that anyone who wanted to receive money from the fund had to agree not to sue ANYONE about 9/11.
Remember folks, up to 9/11 there had never been a fund set up to compensation victims in such a manner. This was set up to prevent 9/11 from being dragged into court where the rules of evidence and the subpoena power of the court would have disclosed the entire 9/11 sordid affair.
When there is something to be covered up, there are plenty of bag men to do the job. The co-chairmen of the 9/11 commission are/were two well known cover-up bag men. If this gets approved, rest assured there is a big shit bag that needs to be buried and everyone wants to keep this out of the courts.
I'm taking bets here and now. Anyone who wants compensation must give up their right to sue.
I am very suspicious that this was planned as the next crisis to enact sweeping environmental regulations, law changes, massive tax hikes along with even more government expansion. Cap and trade up next.
Then you are a total d-bag.
No president would want 12+ Exxon Valdez spills into the area where we get a large majority of our seafood, not to mention fuck up LA so it has to be rebuilt... again.
If Obama was able to swim down 5000ft and depressurize a well to cause this so he could put in place cap and trade, id give it to him, but, he can't.
The only sketchy thing that is in play here is that BP order the other contractor companies to cut corners knowing the possibilities and loss of revenue, and lost on both fronts.
The question isn't whether to be suspcious or not suspicious. The question is it possible to be suspicious enough.
Here's my concern, CD: Odd, isn't it, how Obama told us he would "inform" BP about the escrow fund. So mandatory, so impressively assertive. And then BP shows up and offers $20 billion. Not a number out of the blue, the deal was already done. This will be administered as other mass tort cases are handled, such as asbestos and the Dalkon Shield: this $20 billion escrow will be handled through a special court system set up to deal with Gulf claims, and nothing else. This is BP's way of finessing the $75 million cap vs. unlimited downside liability. This more "back room." $20 billion is ALL that BP will pay, and Congress will pass on the cap lift. We didn't have 60 votes, etc. The fix is in.
Sounds entirely reasonable. The $20 Billion was just too obvious. It's clear these guys no longer worry about looking obvious, which means they feel they either have us by the balls or they are clearing out the last of the safes before the morning light makes escape more difficult.
My, oh my, but 'tis what happens when Conspiracy is no longer a Theory.
$20B is just a start. Mr Market thinks that's a limit -- WRONG! Follow the CDS...
Stay tuned for the fine print, intended to limit their liability to that amount. Just imagine the size of the disaster, if the BP Board, no pushovers and definitely not feeling charitable, have decided this is a number they can live with.
Price the true cost as several multiples higher, based on this alone.
On the other hand, if you think about it, how much did we blow on the TBTFs blowouts - lots more. $20 billion is chump change to a TBTF, Timmah Geithner or Benny B.
If they came to the table offering $20B for starters, this is a definite sell the news event (unless the predatory prop desks decide to start with the short squeezing).
ETA: Just checked and BP's 2009 net income was $20.8B. As of Dec. 2009, BP only had $*B in cash and AP was greater than AR. They're going to need to cut expenses or raise some cash from an IB or the capital markets to fund this.
Limit of liability per law is not necessarily a fixed amount. Litigation and bankruptcy, let alone governmental fiat/mandate can modify the amount significantly. Just ask the senior secured debt holders of GM and Chrysler.
What'll be of more interest is the Who of the management, responsible for the funds. $20 Billion's a lot of snack bars and sodas to distribute to politically sensitive voters before the November elections. No way the folks who've been damaged gonna see all that money. Will be used to buy votes, wasted, fraudulent efforts accompanied by altruistic platitudes upon the part of the Powers that Be.
Why think otherwise?
Ex-ACORN members.
BP already has an escrow account in the US. It is located in Alaska. China may soon be the asset's new owner.
http://www.bloomberg.com/apps/news?pid=20601087&sid=akXEqg6_doxQ
Okay; but how much is it going to cost us?
The lawyers will get half of it for sure. They will move trailers into the affected areas, bring in the oil-soaked sheeple and commence the avalanche of lawsuits and trials. Like sharks drawn to chum.
The highlight of an Ambulance chasing party??....They get a 1/3 of the cake!
Thought the same thing, Rain. This is nothing more than the Ambulance Chasers' Full Employment Act of 2010.
nice, that's twice the GDP of Afghanistan
$20B? That should last for about 4 weeks. Then Uncle Sam will come back for some more.
that can keep you amerikans going for 2 more years after primary scammers fraction it like they can
Oh joy, another slush fund for the crooks to pillage.
CBOE most active puts & calls:
http://www.reuters.com/article/idCNN1616430620100616?rpc=44
-)
BP's cash and assets will turn into the next WH stimulus. "Never let a good crisis go to waste" - Rahm Emmanuel
Pay czar becomes Oil Slick czar (i guess Rattner is otherwise occupied).
$20b is a nice start. How that $20b is funded is the important part.
And a who cares is worth noting here because this is a nothing but a political move by Obama as he attempts to salvage a measure of credibility on this matter. At the end of the day, the company still won't exist in 12 months.
<At the end of the day, the company still won't exist in 12 months.> Yes indeed. The company cannot continue to exist in the present form and under the present management.
"An independent" fund administrator appointed by the White House. WOW, WOW, WOW!
PS
Dear Mr. President Obama, why don't you just print these $20B monopoly US$? I know the answer: you must use a conduit to hide these money being sent to a Democratic Party re-election campaign.
this is part of the conservation program... destroy people's lives and business and then they won't need so much oil
This should not cost me dime fucking one has been my point. I don't give a shit what the government has to do but do not add any costs of this to the deficit now, 3 years from now, 5 years from now or 10 years from now. I am hearing that major news cameras are being "disuaded" from filming in sensitive (black ocean) areas where thousands of animals and fish are on the surface. $20b is a start but as I said a week ago this was a $50 billion (and that was met with insane attacks) issue at the minimum but with new flow information I would call it more like $60-$70 billion (PV). This is a science fiction nightmare and any ceiling better include impacts on everything - lost jobs, nuclear and water plant shutdowns, extra costs by the government, lost tourism and its impact on RE (huge), etc , etc etc,. down the coast of Florida and Mexico on the other side.
One of the things I have discovered in this crisis is that there are very few people who believe the government should NOT be the final risk taker/big wallet in any situation (Superfund sites, Enron pensions, GM, AIG, etc etc etc) unless it is a) an act of God or B) an act of War or C) a government accident. Without more people thinking this way no wonder fucking why we are bankrupt.
With oil at $75 BP should be able to survive - and I hope it does - but the British have to step in as top management will want their golden parachutes here and will take actions toward that end only. These Execs certainly do not give a shit whether we have to pick up the tab after they are long fucking gone. Well, fuck you is my message to them, and I think the President is hearing this loud and clear as well. He'd better.
Run by Kenneth Feinberg? This is bullish for BP.
CNBC made me laugh this morning, there was an unusually lucid guest on there, talking about the news that some of the German public have allegedly volunteered to donate a portion of their income to the Government for the next 10 years to sort out their deficit problems.
matey boy chimed in with:
"well thats a terrible idea. youve heard the theory before about "give a man a fish and he'll feed his family for a day, but give him a fishing rod and he can feed his family on an ongoing basis.."?
"well if you get the government involved they'll fritter away your fish and most likely come round and 'tax' you of your fishing rod"
I believe that also applies here.
We have now hit day 58 and have probably experienced less then 20% of the total impact.. The 20 billion is already spent. This disaster will be in the 100's of billions if not trillions when all is said and done.
As an aside, I was thinking that now would be a great time for somebody to secede while Obama is busy mismanaging the BP crisis. I can see it now...
June 16, 2010 - Texas secedes
June 17, 2010 - Obama finds out Texas secedes
August 14, 2010 - After 58 days of silence, Obama threatens to kick Texas' ass
August 15, 2010 - Texas pulls Nat Guard from Rio Grande and fortifies Red River telling Obama to bring it.
August 16, 2010 - Obama talks about windmills from the oval office and sets up an escrow account with PAC 10 commissioner Larry Scott.
What happens next? Absolutely friggin nothing.
Where exactly are they getting the cash from? According to their last 10Q they only had a little under $7 Billion in cash and over $32 Billion in debt. Is this another secret Bernancompoop fraud being perpetrated on taxpayers? How do we know the money is coming from BP?
They said they would pay the money in installments over time, not lump sum.
"Where exactly are they getting the cash from?"
You and me and everyone else. They sell oil. This money will come from future sales of oil.
I suspect everyone would be agreeable to a hike in the price of oil to help out those poor GOM victims, right? Or at least a private agreement among the oil producing companies (pull up a video of the hearings in Congress yesterday for the usual suspects) and OPEC/USA/Europe etc.
BP ain't gonna lose a dime on this in the long run.
9/11 fund. jeez. the lawyers got over 150 million. why not save them the ten years work and don't give them shit. everyone's living off the government. people make fortunes just giving out benefits. and this is 'prestigious' legal work. this is why lawyers and legislators make terrible presidents. gimme a governor or someone with leadership experience.
And here it is: the beginning of the end of BP.
I don't know why people are so concerned about this spill.
Lake Mead, the largest reservoir in the United States, created by Hoover Dam, has a total capacity of 35 cubic kilometers of water, what means 35 billion cubic meters of water.
At the current pace, the Deepwater Horizon spill, wich is leaking less than 10 thousand cubic meters per day, will take more than 9 millenia to fill in Lake Mead.
So, it will not cause mass extinction. But it can cause BP extinction...
What about the Great Salt Lake? How long would that take? And it has salt does that matter? How 'bout the Dead Sea. Yuk yuk.
Too bad dead pelicans can't do the math cause they're dead now. I heard tuna can do math. Let's ask them.
For some reason people think this has to either be the end of the world or definitely not. Why can't it be some middle scenario like what Mako says, you know, just half the world's population. I can live with that number. It won't be the end of the world for 3 bill. We're okay.
My thoughts on this are summed up by Rep. Bachmann:
http://minnesotaindependent.com/60259/bachmann-calls-oil-spill-victim-escrow-account-%e2%80%98a-redistribution-of-wealth-fund%e2%80%99
I'm gonna break some windows' glasses at the world headquarters of BP, and mess up the whole building with sewage water.
And I won't pay for it. That would be redistribution-of-wealth and it's communism, and my papa told me communists eat little children at dinner.
Land of 'rule of law' is just kissed good bye.
BP is culpable. ?? is for what? By putting this in escrow they admit their fault. There hasn't even been a 'formal unbiased' look at the events of this accident.
No, BP is not culpable. The UFO's are. A communist swedish UFO blew up the oil well...
I don't know why people are so concerned about this spill
well the gulf is not lake mead
and oil is destroying the incomes of millions
its one thing to float a boat ,, another thing to set in the boat as in sinks into a glob of oil ,
what a stupid insipid example
Oh yeah, no doubt it will be very bad to the fishing and tourism industries of Louisiana, Alabama and Florida, but won't be a mass extinction event. Gulf of Mexico is much larger than Lake Mead. And the spill won't last for 9 millenia (I think...)
By the way, I was being sarcastic when I asked why people are concerned.
since the oil is going into the water and being sucked up by BP- is it free game? can Exxon and Shell, etc all put their straws to BP's spilled milkshake?
This is Obama in his community-organizer element - finding a way to shake-down some cash. It'll be great fun to watch his administration (through an 'independent' third party) yank chains distributing all that hard-earned, well-deserved cash. Want a piece of the $20B action? - let's have a look at where your political contributions have been going of late... http://www.opensecrets.org/indivs/index.php