I first reported last Thursday that Democrats in Congress would propose that BP establish an independently administered trust fund to pay claims in the gulf. Now they and President Obama are filling in the details of the proposal, but no one seems to be focusing on the real reason why this idea has gotten such traction: to give BP (and Obama) the leeway it needs to pay a scheduled $10 billion dividend to shareholders on June 21. The administration needs to be able to point to the escrow account to give itself (and BP) political cover against the outrage likely to ensue in America from the dividend payment.
Obama and BP are locked in a deadly, messy transatlantic dance. The U.S., deeply in debt and facing a voter rebellion over that fact, needs as many billions as it can siphon from London-based BP to pay for the cleanup of the Gulf of Mexico. The cleanup could cost tens if not hundreds of billions of dollars over the next decade.
But Obama, who told Politico on Friday that the spill "echoes 9/11" because of the way it will shape policy for years to come, doesn't want to unduly weaken, let alone destroy, the company for that very reason. Its stock price already battered, its market value down nearly 50 percent since the accident, BP would face yet another pummeling if it refused (or said it was unable) to pay the dividend, which, after all, is based on profits made before the April spill.
Calls are rising to force BP to forgo the dividend. But the idea is not only risky, it's almost certainly unenforceable in the U.S., either by statute or court action. So Obama needs BP officials to voluntarily agree to the independently administered fund—essentially getting the company to promise to empty one pocket even as it lines another.
And if BP refuses? The president can threaten to ban BP from operating in the gulf and to attach BP assets in the U.S. (all those gas stations and wells). Or he can promise not to mention Robert Green.
Fineman is also the author of The Thirteen American Arguments: Enduring Debates That Define and Inspire Our Country.