BP (NYSE:BP) Won't Be Able to Pay All Damages Says Feinberg

One of the problems with the BP (NYSE:BP) spill and the expectations of American culture that you can go down just about any rabbit hole to get compensated to perceived wrongs, is facing the reality of fallacy, as BP escrow fund czar Kenneth Feinberg recently confirmed, saying, "There's not enough money in the world to pay damages for every business where and when."

In other words, Feinberg is centering on managing expectations and trying to get people to think through making claims.

If everyone thinks they can make a claim, it won't matter what methods are used to streamline the process, it's going to take a long time to go through all the bogus claims, and claims that are thought to be justified, but are far from legitimate or realistic.

For example, one lawmaker asked how those who own real estate will be compensated from the lowering of values.

The answer of course is that they won't. How could they? The recent mortgage fiasco revealed that it is impossible to do it.

This is part of Feinberg's attempt to lower expectations and focus on what can be paid and what should be paid for.

People and businesses can make all the claims they want. The question is whether there will be the money to pay for it.

It seems the wise thing to do would be to only allow claims which are directly affected by the oil spill, and not go down that route where lawyers, businesses, people, and opportunistic politicians attempt to trace every possible connection to the oil spill, even if it's five times removed from the center of the damages.

A government institution, for another example, wants BP to pay for mental health care from fears and other dubious claims made by people upset by the situation.

What happens next time there's anything in life that upsets someone? Does that business or entity have to then pay out so-called mental health costs so people can be made to feel better? It's ridiculous and simply a government agency trying to take advantage of the situation to use BP as a source of revenue.

You get the idea. There are hundreds, and probably thousands of scenarios like this that we could talk about, or probably will even attempt to be played out.

Feinberg is essentially saying that government, businesses and people in general will need to think through their claims, as dubious and spurious claims won't be hardly considered, let along paid, as some that probably have legitimately suffered real damage from the oil spill won't be able to be paid either.

As he said, there simply isn't enough money to take care of everything, and that's a fact of life a lot of people had better start dealing with, especially if the damages involved aren't immediate and obvious.