Feinberg Say $10 Million Paid in BP (NYSE:BP) Claims

In the first week since launching the BP (NYSE:BP) compensation fund, claims administrator Kenneth Feinberg said almost $10 million was paid out in emergency payments to residents of the Gulf Coast region.

So far, 1,935 emergency claims have been made, primarily for lost profits or earnings to individuals and businesses. The majority of payments were no higher than $5,000, and some dropping as low as a penny.

For those wanting to finalize their claims and bypass litigation, there are over a 1,000 people, according to the Gulf Coast Claims Facility, where the individuals or businesses will have to waive the right to sue BP if they are to receive the payment. At this time no final claims have been paid.

Over 29,000 claims are now under review, and the agency said only one has been denied so far.

Louisiana residents are leading the list for emergency claims, as they took the heaviest hit from the oil spill. They collectively have received close to $4 million, while Florida is next with $2.4 million.

BP (NYSE:BP) Compensation Fund Launches Today, Feinberg Ready

The new compensation or escrow fund, now officially named the Gulf Coast Claims Facility, has launched today, and parameters are in place for claimants to make a decision on whether to accept or decline what is offered them.

Fund administrator Kenneth Feinberg said, "These guidelines are the result of many town hall meetings throughout the Gulf, listening to the people affected by this disaster."

The only ones really making any significant noise about the fund going forward are trial lawyers who see their 30 percent of the money going to the claimants instead of them.

President of the American Association for Justice, Gibson Vance said on Friday, "...it would be detrimental to claimants if they are forced to accept final payments before the full impact of the spill is realized."

In reality, they would come out ahead. Take away the 30 percent the lawyers would get, and why would claimants extend things out to make BP pay the utmost (assuming that even happens) when they can get their payment now when they need it.

The only people it would really be detrimental to would be the lawyers who have had their greedy eyes lowered because the majority of businesses and people will realize it makes little sense to wait longer to get a higher payment that will only benefit the lawyers and not them.

There could possibly be a few cases which that would be different, but it would have to be unique for it to overcome the 30 percent fee the lawyers will enjoy.

Feinberg has already said he's going to be generous with the fund, and probably will be, so there's very little incentive for victims of the oil spill to wait for a bigger pay day that in the vast majority of cases will never come, and if it does, will make the wallets of the lawyers fatter, not theirs.

Mississippi Governor Concerned Over BP (NYSE:BP) Escrow Account

There are already a number of concerns over the pressure from Obama to have BP (NYSE:BP) put $20 billion into an escrow fund to pay claims in the years ahead, with $5 billion a year being committed to the task.

One of the latest concerns is from Mississippi Gov. Haley Barbour, who said he's not sure it's a good idea because BP would be a more predictable company in using their capital to generate revenue, which in turn would make them a healthy company which would be able to pay for their responsibilities, rather than a company dumping billions into an account that produces nothing.

BP has already been paying out millions in claims, and it is questionable as to whether or not this fund will be more fair and faster than they are doing it now.

While acknowledging BP must pay all for the losses in the region, Barbour said it remains to be seen whether or not the escrow account was the most efficient way to accomplish it over the long term.

BP (NYSE:BP) UPDATE: Legal Claim Process, Compensation Claims

BP (NYSE:BP) and President Obama reached an agreement on they will handle the company's compensation claim and claim process. A $20 billion fund will be set up to compensate the victims of the oil spill.

After a four hour meeting with BP officials, Obama made the announcement of the agreement. BP has also said they will set up an additional $100 million fund which sole purpose would be to be used to compensate oil rig workers that will lose six months pay due being laid off because of Obama's moratorium on deepwater drilling.

"The structure we are establishing today is an important step toward making the people of the Gulf coast whole again, but it will not turn things around overnight. This is about accountability. At the end of the day that's what every American wants and expects. The people of the Gulf have my commitment that BP will meet its obligations to them. This $20 billion amount will provide substantial assurance that the claims people and businesses have will be honored," said Obama. He ensured that the $20 million is not a cap on BP's liabilities and will pay more if needed

The claim process fund will be run by Kenneth Feinberg, who was in charge on the September 11th compensation claims process and overseeing payments to families of victims. There will be a three member panel who will be in charge of the claims that are turned down. This setup helps setup a formal process instead of vague promises by BP.

BP's (NYSE:BP) Compensation Claim and Claims Process

Robert Gibbs, White House spokesman ensured that Obama is poised to take over the handling of BP's (NYSE:BP) oil spill compensation claim and claims process if needed, to ensure people get the help needed to recover from this disaster.

On the matter of the disputed damage payment, Gibbs said. " We have to get an independent claims process. I think everyone agrees we have to get BP out of the claims processes, and as I said, make sure that fisherman, hotel owners have a fast and efficient and transparent claims process so that their getting their livelihoods replaced."

"This disaster has taken their way of making a living away from them," he said. "We need to do this quickly, and we have to make sure whatever money goes into that, that in no way caps what BP is responsible for. Whatever money they owe to anybody in the Gulf, there going to have to pay regardless of the amount."

According to Gibbs, the purpose of taking the control of the claims process out of BP's hands would be to make economically distressed individuals and businesses "whole." Obama has made an outline of a comprehensive response and recovery program.