President Obama is urging BP to hold off on paying $1.7 billion in dividends to its shareholders, and demanding that the company set up an escrow account for victims of the oil disaster in the Gulf of Mexico instead. As Obama unveils his proposal, Senate Democrats are going a step further, calling for BP to put as much as $20 billion in the victims' fund. BP's board convened on Monday to discuss what to do, but suspending the dividend would deprive thousands of investors — including pensioners in Britain and the U.S. — of anticipated income. Who should BP pay first: Shareholders or victims? (Watch an AP report about Obama's leaning on BP)
Crippling shareholders won't clean up the Gulf: The immediate priority here is cleaning up the Gulf of Mexico, says Steve Schaefer at Forbes, and "restricting BP's ability to pay its shareholders" isn't going to do that. BP is a "giant oil company" — it has plenty of cash to reimburse victims "without pinching pennies from Mom and Pop shareholders." So let's focus on "mitigating the effects of the spill," and worry about punishing BP later.
"Leave BP's dividend alone"
Cancel the payout, and start thinking about the victims: Creating a victims' escrow account is best for everybody, says Tony Fratto at CNBC. It lets the White House show Americans it's "holding BP accountable," and it gives BP "credibility" at a time when people are doubting its promise to reimburse all legitimate victims. But it also helps shareholders by showing there's a limit to BP's potential losses, which could help pull BP stock out of its nosedive.
"For BP and Washington, an escrow fund pays dividends"
BP's not the only one that should cancel its dividend: Everyone's focusing on BP because it's "a household name," says Colin Barr in Fortune, while nobody's paying attention to Transocean, the operator of the drilling rig that exploded and started the whole mess. Safely outside the spotlight, Transocean is preparing to pay out its own $1 billion dividend to investors next month. But, as BP is learning the hard way, Transocean's best course is to "heed common sense and call off its dividend."
"Transocean must deep-six its dividend too"
THE WEEK'S AUDIOPHILE PODCASTS: LISTEN SMARTER
- America created the Islamic State of Iraq and Syria? Meet the ISIS 'truthers'
- Russia's giant spy ship was a high-tech disaster waiting to happen
- How American businessmen are ruining American business — and the U.S. economy
- The Obama era is over. The presidency continues.
- What would a U.S.-Russia war look like?
- How Harry Houdini escaped death
- Fall movie guide: All the films you should see in September
- On ISIS, neocons and liberal hawks have a 'boy who cried wolf' problem
- 10 things you need to know today: September 2, 2014
- 11 scientific studies that will restore your faith in humanity
Subscribe to the Week