The harder they should fall
THERE IS no need for
In his June 15 national address, President Obama declared BP’s oil spill in the Gulf of Mexico to be “the worst environmental disaster America has ever faced.’’ He said this is a disaster “that we will be fighting for months and even years.’’ The very next day, he had his alleged showdown with BP executives. The headline was that Obama extracted a commitment of $20 billion from BP to settle damage claims.
However, Obama also affirmed his confidence that “BP will be able to meet its obligations to the Gulf Coast and to the American people. BP is a strong and viable company and it is in all of our interests that it remain so.’’
It sure would be nice if Obama could explain why we should keep BP big. Ken Feinberg, the negotiator appointed by Obama to run BP’s $20 billion compensation fund, last week said that the fund was much more preferable than for BP to go out of business under the crushing costs of its devastation. He told FOX News that bankruptcy “would be a horror. If BP ever was unable to pay valid claims because of bankruptcy, that would be a disaster for BP, it would be a disaster for the people in the Gulf, it would be a disaster for the economy of the Gulf. I think that is not an option.’’
Feinberg reiterated to Gulf residents in Larose, Louisiana, “There is absolutely no sense at all in driving BP into bankruptcy.’’
It is all starting to make sense, in an insane way. Unemployment in the United States is still near 10 percent because of the meltdown caused by the recklessness of our biggest financial institutions. Congress is finally near passage of a so-called financial overhaul that puts more oversight on the biggest institutions and supposedly puts mechanisms in place to safely liquidate collapsing firms. Obama proudly said last week, “No longer will we have companies that are ‘too big to fail.’’’
Yet nearly every analysis says the measure is too little to succeed in another crisis similar to what we experienced. Dean Baker, co-director of the Center for Economic and Policy Research, told the Los Angeles Times, “There is probably no economist who believes that this bill will end the risks of too-big-to-fail financial institutions.’’
Now comes Obama’s advance blessing to BP, which amounts to a political bailout. No company should be praised as “strong and viable’’ when its damage so drastically cripples the viability of an entire region of the nation. Every company that skirts regulations and has no realistic disaster plan should face the possibility of closure. Given how the other oil companies — no environmental angels themselves — gleefully criticized BP at a recent congressional hearing, we can be quite assured that if BP went down, the rest of Big Oil would easily pick up the pieces. And they would do so with much more fear that the same thing could happen to them.
An analysis this month by Dun & Bradstreet found that businesses in coastal counties in Louisiana, Florida, Mississippi, and Alabama normally experience half a trillion dollars in total sales. The potential economic damage from the oil spill is so uncertain that Dun & Bradstreet executive Bill Pastro told The Advocate in Baton Rouge, “We personally have a gut feeling’’ that current economic impact estimates “are relatively small.’’
Until we know that impact, Obama is wrong to assure that BP is here to stay. A company that bankrupts the “small people’’ is too big to enjoy our blessing.
Derrick Z. Jackson can be reached at email@example.com.