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July 28, 2010

BP: Tax Write Off Nets Them $10 Billion Of The $20 Billion Compensation Fund

ArthurK, who does a bang up job in the headlines, has this in the sidebar but it's too fun to ignore.

Seems the most competent administration ever, let BP set up the compensation fund in a way that they can write about half of it off.

But the issue may raise red flags among federal officials, particularly in light of recent efforts by various other entities that have settled with the U.S.

One notable example is Goldman Sachs Group Inc., which agreed last month not to seek deductions for $535 million in penalties as part of its settlement with the Securities and Exchange Commission. The SEC had sued Goldman Sachs, alleging that it hid critical information from investors in mortgage securities.

SEC officials had come under fire from Congress for previously allowing tax deductions from penalties in other cases.

Another wrinkle, though, is that it appears no other entity in hot water with the U.S. has incurred costs on the scale that BP has. The company has agreed to put $20 billion in an escrow account to pay claims for oil-spill damages.

A goof?

But half of that may now come out of government coffers, and it could prove to be embarrassing for the Obama administration, presuming the president and Hayward did not discuss the issue at their recent meeting, says David Desser, managing director of Juris Capital, which invests in corporate litigation. It was after that meeting that Hayward announced the $20 billion escrow fund.

“You would have thought in advance of that meeting, they would have thought of all of those issues,” Desser said. “How do you un-ring that bell?”

"It looks to me like maybe the administration goofed here," he added.

By going on The View of course.

How connected do you have to be to get better treatment than Goldman Sachs, which is after all the company that runs the country or something?

I'm sure there's a distinction to be made between settlements where the party admits guilt and the BP case where they are setting aside money ahead of formal charges but the politics of it look awful for Team Obama.

Bestest Administration EVER!


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