With a bit of a shove from President Obama, BP agreed to put $20 billion into an escrow fund to compensate Gulf residents and businesses harmed by the massive oil spill. It also agreed to set aside $100 million for oil workers idled by a six-month moratorium on deepwater-drilling and to scratch its dividends to shareholders for the rest of 2010. Will $20 billion, divvied out by 9/11 paymaster Kenneth Feinberg, be enough to set things right? Is it too much for BP? (Watch an MSNBC discussion on whether the escrow fund is enough)
$20 billion is a good down payment: Given the enormity of BP's Gulf oil disaster, "we suspect that $20 billion may not be enough to compensate all of the people whose lives and futures have been derailed," says The New York Times in an editorial. "But it’s a good start," and, importantly, it's not a cap. There are plenty of reasons "not to trust BP," but now at least they can't just walk away.
"BP begins to ante up"
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BP should pay on its own terms: I get that BP was subject to public pressure — and possibly Obama hardball, says Douglas McIntyre in 24/7 Wall Street. But it shouldn't have caved. Instead of signing its shareholders' cash over to government control, BP should've insisted on running the fund itself, pledging to "pay as much money as necessary," be it "well over $20 billion... or well under."
"BP loses last ace, gives into U.S. escrow demand and kills dividend"
This may be BP's best bet: "If $20 billion up front prevents some of the 21 years' worth of legal fees Exxon shelled out" for the Valdez spill, says Nicole Allan in The Atlantic, the escrow solution "will probably be worth the sum." BP might also be "calculating" that Feinberg, as he did with 9/11 victims, will "discourage oil spill claimants from suing the company by granting them just-generous-enough escrow fund packages."
"The BP escrow fund: Chaos to come"
It's the Gulf's best bet, too: Exxon used that passage of time, its "phalanx of lawyers, and friendly courts," to escape much of its financial obligations for the Valdez disaster, says Andrew Leonard in Salon. So getting BP to agree to an independent fund now, when it has "no wriggle room to escape responsibility," is a great idea to ensure that Gulf residents get something.
"BP surrenders to Obama"
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SEE MORE OF THE WEEK'S COVERAGE OF THE BP OIL SPILL:
• BP's 8 dumbest mistakes
• Punishing BP: 6 brutal proposals
• BP oil spill: 9 strange facts
