Friday, July 2, 2010

Feinberg Changing BP (NYSE:BP) Escrow Fund System for Faster, Larger Payouts

Some news agencies were carrying the story that the claims made against BP (NYSE:BP), which will be paid out through their escrow fund will be faster and with no limit.

Both assertions are questionable, although that's the desire and goal of administrator Kenneth Feinberg.

First, there's no way there will be limitless payouts. It's simply not going to happen, and Feinberg recently stated when taking to lawmakers that all the money in the world couldn't pay for all the damages related to the oil spill; or at least perceived damages from those wanting some money.

What Feinberg really said was there would be no predetermined limit, not that the payments will be without any limits whatsoever.

Another change is there will be lump-sum payments offered instead of the month-to-month payments instituted by BP.

This could end up being a problem for many, as businesses and people tend to spend money quickly when they get it; something they aren't able to do when its distributed on a weekly or monthly basis.

Many don't look at it that way though, but they'll find it will be a problem unless they have self control.

But that's not BP's or Feinberg's problem, and if they want it that way, and get it all upfront instead of incrementally, it's on them as to how they manage it.

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