Congressman Joe Barton hasn’t had many defenders since his apologized to the CEO of BP at a Congressional hearing on Thursday. But Fox Business Network host Stuart Varney believes the Texas Republican had a valid point in describing White House pressure for BP to establish a $20 billion escrow fund as a government “shakedown.”
“In that White House meeting,” Varney dramatically told the hosts of Fox & Friends on Friday, “reportedly Vice President Biden says, ‘Pay up or else we’ll bring the full court press of the United States government to bear on you and you will pay.'”
“It bypasses the courts,” Varney added. “Liability claims should go through the courts. This time they didn’t.”
As it happens, a fear of precisely the kind of prolonged litigation that occurred after the Exxon Valdez oil spill in 1989 was one of the major considerations prompting the creation of the escrow fund. Last week, the Huffington Post’s Sam Stein wrote, “The lessons of the Exxon Valdez disaster have made members of Congress increasingly insecure about the promises made by BP to cover the total cost of the damage it’s caused in the Gulf of Mexico.”
“Sen. Byron Dorgan (D-N.D.) told the Huffington Post that he wants the oil giant to sign a pledge committing itself to covering economic damages that would be legally binding,” Stein continued. “Doing so would fulfill the promises BP has already made, the North Dakota Democrat argued. It would also effectively remove the possibility that the company could drag out questions of liability through decades of litigation — much like Exxon did following its spill in Alaskan waters.”
Varney, however, appeared to see no motivation for the escrow fund besides political posturing by a federal government that has been unable to deal with BP’s disaster. “The administration wins politically by beating up on BP and taking $20 billion off them,” he stated indignantly. “It also diverts attention from the administration’s own failure to clean up this mess.”
Beyond that, Varney sees in the fund a threat of creeping socialism.
“What happens if BP can’t come up with this $20 billion?” he asked. “Let’s suppose that the administration does, indeed, drive them into bankruptcy. … Essentially, BP becomes nationalized, because part of this $20 billion deal is, ‘If you can’t pay, we get your assets.’ … That $20 billion deal essentially contained a lien on BP North America. Collateral. If you don’t pay, we get the pipeline.”
Varney’s nightmare scenario does not appear highly likely to occur. Currently, BP appears in online listings as having $240.64 billion in assets, ranking second in its industry only to Exxon Mobil, and its profits for the first quarter of 2010 were $6 billion. Although speculation was rife ten days ago that the Gulf disaster might drive BP into bankruptcy, analysts quickly concluded that BP has the financial flexibility to deal with its liabilities unless “we’re still talking about this in 2011 and the price tag has reached $75 billion or $100 billion.”
Varney, however, warns direly that BP “could yet be forced into bankruptcy. And if they are, then BP is semi-nationalized by the American government.”
This video is from Fox News’ Fox & Friends, broadcast June 18, 2010.