June 20, 2010

In the everlasting battle between those on the far left and the far right to find something to complain about, the latest would seem to be Kenneth Feinberg.

The left side of the argument goes like this: Feinberg's contract is with BP; therefore, he will not act in the best interest of claimants.

The right side of the argument goes like this: OMG!!!! Feinberg's doing the "Obama shakedown"!!!! There is no point in arguing with irrational people who think this is a real argument. These folks should really just talk to those who saw any and all settlement of their losses in Alaska after the Exxon-Valdez spill evaporate in the name of tort reform. That's more or less all I have to say about the Republicans' and affiliated groups' arguments. Irrationality begets insanity after awhile. They're there.

At least the left-hand side is based on something other than base idiocy. It could be argued under some circumstances that the contract arrangement might suggest bias, or pressure to put the company's agenda ahead of those who suffered losses. I disagree, but it is at least based on some form of rational thought.

NOLA.com has more details on the relationship between Feinberg, BP, and the escrow fund:

Willis said BP presented a list of suggested names to the president to fill the position. Feinberg said he will operate as a private, independent agent on contract with BP. His pay and the costs of the new facility will be provided by BP directly and will not come out of the $20 billion claims fund, he said. If either the president or BP is dissatisfied with his performance he will walk away, he said.

Point number one: Not one penny of the escrow fund will be used to cover the administrative costs for Feinberg and his staff.

BP should be financing the position because there is no other good choice, Feinberg said. Neither the government nor the victims of the spill should have to contribute money to pay for the administration of the claims program, he said.

Point number two: BP, and ONLY BP, is responsible for costs, damages and claims arising out of this disaster. Therefore, it makes sense for BP to contract with Feinberg, a third-party (and in 2008 was the government adviser overseeing bonuses to executives of banks receiving TARP funds) rather than the government.

Point number three: Louisiana tort law is different from every other state's. It is renowned for its complexity and difference from the other 49 states. Before claims can be administered, standards have to be set that comply not only with Louisiana tort law, but also Mississippi law, and possibly Florida and Texas laws, too.

With that in mind, it's worth looking at Feinberg's past history with regard to claims adjudication.

Mediated Product Liability Settlements

These cases were dragging in the courts for years. Victims had received nothing at all when Feinberg became involved.

  • Asbestos-damage suits
  • $2.5 billion settlement of class-action lawsuit for the Dalkon Shield class-action lawsuit
  • Agent Orange class action lawsuit on behalf of veterans
  • 9-11 Victims' Compensation Fund
  • Arbiter of compensation caps on bank executives whose banks still owe TARP funds.

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