BP Puts $20bln into Escrow for Gulf Claims

As the result of talks with the Obama administration, BP will put $20 billion into an escrow account for Gulf oil spill claims. The Financial Times has more:

President Barack Obama met Tony Hayward, BP’s chief executive, and Carl-Henric Svanberg, chairman, in the White House on Wednesday morning. The fund will be administered by Kenneth Feinberg, the White House said. He was the administration’s “pay tsar” who oversaw bankers’ pay following the financial crisis bail-outs.

Under the terms of the preliminary deal, BP will pay $20bn into an escrow account over the course of several years. The funds will be used to pay claims for economic damages from Gulf Coast locals whose livelihoods who have been devastated by the spill, and to pay for environmental clean-up and restoration.

Before the meeting, Mr Obama said he would make BP “set aside whatever resources are required to compensate the workers and business owners who have been harmed as a result of (the) company’s recklessness”.

The LA Times writes:

The push for an escrow account is one of several strategies planned by the administration this week in an apparent effort to rebut mounting criticism from the left and right that Obama has failed to respond to the disaster with sufficient adroitness or passion.

The federal government and public have become increasingly frustrated with BP after its numerous failed efforts to stop the leak —- and as the original estimate of a 1,000-barrel-a-day problem has been dramatically revised upward. On Friday, federal officials said that number could be closer to 40,000 barrels a day.

$20 billion is symbolic, but it won’t get close to covering all the losses that industry, individuals, and the environment will accrue. I’d like to see different oil companies and the government put together a fund closer to $200 billion.

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