Lawmakers weigh how to make BP pay
A clean-up worker walks along a stretch of oil-contaminated beach in Grand Isle, La.
Nine percent. That's how much BP shares gave up today. Almost 10, if you really want to know. This is a big week for the oil company. We're expecting to learn what BP's decided to do about its dividend. A matter of no small interest to those shareholders who've seen almost 60 percent of their investments disappear. CEO Tony Hayward is going to be the special guest of a congressional committee later this week. He will also meet with President Obama at the White House before the president's speech. It's no secret what the president will say. He wants the leak stopped, and he wants victims of the oil leak -- not BP shareholders -- to get paid first. In fact, he wants to make sure those victims get paid. Period.
By Rob Schmitz
BP CEO Tony Hayward says his company will pay all legitimate claims for the Gulf spill. But will he do it? That's what Louisiana Treasurer John Kennedy wants to know.
"Show me the money," Kennedy said. "I want to see it. I want to know that the money will be there. I'm glad BP is the fourth largest company in the world, I'm glad they have $81 billion in assets, I appreciate their commitment to pay us in full. Show me the money. Put it into escrow."
Last week, Louisiana and Florida demanded BP set aside $7.5 billion into an escrow account to pay for the mounting damage to their economies. Now the Obama administration wants to take over, demanding BP finances a fund managed by a third party to pay victims of the spill. The president could ask for direct government control of the fund, but energy industry analyst Kevin Book says that wouldn't look good to our British friends, many of whom are BP shareholders.
"One country's solution is another country's problem right now, and the last thing you want is the perception that the U.S. federal government has reached into the coffers of a British company," Book said.
A British company, says Book, that also contributes jobs and capital to the U.S. economy. The amount BP pays, says Book, has to be big enough to reassure American voters, but modest enough to ensure BP doesn't go bankrupt in the process. Last week, a group of Democratic senators asked for a $20 billion fund -- that's around twice the amount of cash BP currently has on hand.
I'm Rob Schmitz for Marketplace.