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Countering loss with compassion and money

Kenneth Feinberg settles accounts with survivors after disasters like Sept. 11 and the BP oil spill. The task is grueling, but he sees it as an act of patriotism.

November 30, 2011|By Carol J. Williams, Times Staff Writer

"Do not underestimate the emotion associated with financial uncertainty," Feinberg said, raising a finger to blunt any suggestion that economic losses are less traumatic than fatalities. "The future of your livelihood in the gulf — will there be shrimp five years from now, what will happen to the oyster beds, what about my mom-and-pop hotel where tourism's down? The common denominator in all of these tragedies is emotional anger, frustration, worry, disappointment."

One task less stressful for the man dubbed the "master of disasters" was his assignment two years ago to put curbs on the pay of Wall Street executives whose firms took taxpayer bailout money under the Troubled Asset Relief Program, after the housing speculation bubble burst.

Congress demanded a quid pro quo of reductions in executive pay for the seven biggest bailed-out institutions, including AIG, Bank of America and CitiGroup. Feinberg was handed the hatchet, and he cut the compensation for 175 corporate elites.

"That was a program that Congress enacted that was pure populist revenge," he said. "There's no question that acceleration of repayment was driven by the knowledge that until they repay, the government would continue to determine their pay.... Bank of America even borrowed money to get the government out."

Feinberg noted that the mass resolution of compensation is tougher in cases with capped funds. With the exception of the $8-million Hokie Spirit Memorial Fund he distributed evenly among the families who lost someone to the Virginia Tech massacre four years ago, Feinberg hasn't had to "take from Peter to pay Paul," he said.

One fact of compensation case law, Feinberg says, is the dispassionate number-crunching to quantify a victim's lost future earnings. "Courts do that every day and have for over two centuries," he said. "The stockbroker or the banker killed in a train wreck gets more than the waiter or the busboy. That's the American legal system."

Although funds and marching orders to settle the financial fallout of disaster have helped alleviate money woes among victims, that strategy for dispute resolution has limited application, Feinberg has concluded.

"The idea that these programs like BP or the 9/11 fund are a precedent — forget it," he said with a wave. "These are one-off programs designed to respond to very unique tragedies. They're not a model for anything."

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