$10B in liability for BP is just a smokescreen.

[SlipperySlope]

So I see in the news that they are talking about raising the liability cap for oil spills from $75M to $10B.

http://news.yahoo.com/s/nm/20100505/pl_nm/us_oil_rig_leak_senate

My opinion is that this is a "feel good" action that serves more to protect than to punish BP.

I wouldn't be surprised if the damages due to this spill run into the hundreds of billions. Capping damages at $10B will be little more than a "slap on the wrist". It will let Congress pretend they are playing tough with BP while actually shielding BP from the true cost of what is coming.

BP has nearly $40 billion in earnings (EBIDTA) last year. $10 billion in liability is barely 3 months earnings. I sure would love to have Congress declare that I can't be held liable for the consequences of my actions any more than 3 months of my income.

BP should be looking at liability without limit. Every cent of damage they cause needs to be born directly by the company and its shareholders.

[Ruby the Liberal]

1. Not to mention Citizens United

Saw an article referencing this today -- BP can spend as much as it wants to buy the people they need in those seats this fall.

[HysteryDiagnosis]

2. The real kicker is that this may let others think it's only a little fine, on

with business as usual.

[FBaggins]

3. The problem with that theory

is that there is already a cap on their liabilities. Raising the cap (which likely can't be done anyway) only improves things.

[SlipperySlope]

5. No, it lets Congress look like they "did" something.

The current cap on liability is $75M.

As the extent of the damages become clear, the public will be demanding louder and louder that Congress do something.

So, what if they raised the cap from $75M to $76M? The change would be so meaningless that there is no way Congress could fool anybody that they had acted meaningfully. So they need a number that sounds like they did something, but still shelters BP from the consequences of their actions. $10B is probably a number they can sell to the public that looks like they did something when they didn't.

[rudy23]

4. That'd be great if they can cap the damage the Gulf Coast economy at 10 bill

The 75 mill is typical sandbagging to make the 10 billion seem large enough.

[jody]

6. Not just BP but every stockholder should have their assets taken to pay for the damage. Limited

liability of a corporation encourages risk taking and that eventually ends in disaster with We the People paying the gambling loss.

Lloyd's of London, not a limited liability corporation like in the US, is an example where individuals, along with corporations, have their personal fortunes at risk.

"Until 1994, Lloyd’s risk was supported by 34,000 wealthy “Names” whose entire wealth backed the policies written by its members. The dramatic losses in the early 1990s bankrupted some of these 'Names' and today only 10 percent of Lloyd’s risks are carried by “Names” with no new “Names” allowed to enter."

See http://beforeitsnews.com/story/1137/Modernizing_Lloyd_s_of_London.html

[The Croquist]

7. Why is there a cap at all?

Seriously. The very idea of a cap is absurd. What right did Congress have limiting liability to begin with?

I don't think you can go after the stockholders because that was the deal in place before the spill and retroactively changing laws is a bad idea.

My understanding is that they are responsible for all physical damage but are limited in terms of lost economic opportunity.

That sucks.

[SlipperySlope]

9. Retroactively changing laws...

Oh, like retroactively changing the bankruptcy laws after people are already in debt?

[The Croquist]

10. No

Like retroactively changing the bankruptcy law after people have already been declared bankrupt by the courts.

[Kablooie]

8. Let's cap their losses so thousands of fishing and tourist businesses can pay instead.

by going out of business permanently leaving millions of people with no income or future.

That's much better than requiring BP to pay for their accident because they are much too big to fail.


:sarcasm:

[wtmusic]

11. A BP employee told me damages will top $1T. nt

[kristopher]

12. Oil drillers have the same (lack of) liability structure that nuclear power plants enjoy

It's fine for the small stuff but when a major incident occurs it is all on the back of the public.