Kenneth Feinberg talks about compensation for Sept. 11, BP oil spill victims
Kenneth Feinberg built a soundproof room at his Bethesda home. He’ll sit there for hours, just listening to the horns and the strings, the sopranos and the basso profundos.
He can choose from 9,000 recordings, amassed over his long, long love affair with opera. Whichever one he selects, he likes to turn the volume up loud. The room is sufficiently padded to keep the sounds inside from leaking out.
But the thing about padded rooms is that they also keep the sounds outside the door from leaking in. If anyone in America can be excused for sealing off the outside world from time to time, it would be this 66-year-old Boston transplant.
For more than a decade, Feinberg has been the national Great Decider, a man who guzzles human tragedy or aggregates human greed, then processes it all into dollars and cents. A lawyer by trade, Feinberg decided how the victims of the Sept. 11, 2011, terrorist attacks would be compensated, and he parceled out donations for the dead and wounded in the Virginia Tech massacre. He sorted through the wreckage wrought by Wall Street’s credit-default swappers and the environmental destruction visited upon the Gulf of Mexico by BP.
Feinberg details all those dramas in a clearly written and emotionally contained new book that he titled: “Who Gets What: Fair Compensation After Tragedy and Financial Upheaval.” But the book, which went on sale Wednesday, could just as easily have been called: “If you think you can do better, be my guest!”
“Here’s the keys. You want to do it? You do it,” Feinberg says to me one afternoon at his office in the Willard building, a few steps from the White House.
Feinberg understands more than anyone that he does work few would want to undertake: quantifying the value of a lost limb vs. the value of a lost life or telling a widow that even though her husband was a lovely man who volunteered at the Lions Club, he’s worth only a fraction of what she needs.
It’s all numbers, Feinberg says, “not rocket science.” I ask Feinberg to consider a hypothetical scenario: Who would be worth more, Bernie Madoff or Mother Teresa? He hesitates not at all: Madoff.
From there, he launches into the predicted lament by Mother Teresa’s representative: What about her reputation? What about her unparalleled contributions? Isn’t that worth something, say $20 million?
Feinberg talks over the strains of an opera pouring out of speakers in his long, spacious office, where the shelves nearly sag under the weight of framed congratulatory letters and the walls are lined with glowing newspaper profiles. In the kaleidoscope of Feinbergian proximity to power, there are too many marquee names to chronicle here. He hasn’t even had time to get around to framing a photo of him with the guy who lives down the street — Feinberg’s grip-and-grin with President Obama curls into itself, one edge sliding into a gap in the shelf.
Not long into the interview, Feinberg identifies the music on the stereo as the opera “Faust.” But later he cuts himself off mid-sentence and jumps out of his chair to lope closer to the speaker. Energy is not something he lacks. “No,” declares the president of the Washington National Opera’s board of trustees in a voice both booming and utterly assured. “It’s Verdi’s ‘Don Carlo.’ Act One. Enrico Di Giuseppe.”
Feinberg’s intonations evoke the Massachusetts of his youth, so when he says a word such as half, it comes out as “hoff.” He learned the ways of Washington as a staffer in the 1970s for Sen. Edward M. Kennedy, sharing a cramped space with fellow future legal stars David Boies, of Bush v. Gore fame, and Supreme Court Justice Stephen G. Breyer. Feinberg and Breyer remain particularly close, at times talking on a daily basis. They, along with Georgetown law professor and former Federal Trade Commission chairman Robert Pitofsky, make up what is surely one of the legal world’s most high-powered regular lunch bunches.
Kennedy was a friend for life, too, and Feinberg visited the legendary senator at his Massachusetts retreat in the months before his death. “You might go off the payroll, but you were always a Kennedy employee,” Feinberg says.
An unusual specialty
Feinberg laid the groundwork for his unusual specialty practice under the mentorship of Jack B. Weinstein, a New York federal judge who appointed him as a special master in 1984 to dole out the $180 million settlement of a class-action lawsuit brought by veterans exposed to the defoliant Agent Orange. Weinstein arrived at the novel idea of holding hearings across the country to decide who would get paid. Feinberg accompanied him and writes that he marveled at the veterans who “pleaded for money — not for themselves, but for their brothers in arms.”
Feinberg’s Agent Orange experience made him a logical choice to oversee the Sept. 11 compensation fund, a task that made him a household name as he handed out more than $7 billion to victims and their families from a fund established by Congress and the George W. Bush administration. He was generally lauded as a modern-day Solomon. Yet giving away money is a strange business, and he sometimes had strange encounters. He flew to London to meet with foreign families, he says, and “they were absolutely convinced I was working for the CIA.”
Before Sept. 11, 2001, Feinberg says he was intent on building a mega-law firm. But afterward, his perspective changed. Things that mattered before didn’t seem to matter as much anymore. “I am much more fatalistic,” Feinberg says. “I don’t think I plan more than two weeks ahead. You never know what’s going to happen.”
The Sept. 11 fund, as well as his later work for the Virginia Tech memorial fund and as the “pay czar” overseeing compensation for executives of bailed-out financial companies, came with unambiguous optics. He was doing “patriotic” or empathetic work without pay, Feinberg says. But the BP spill was a different matter. As famous as Feinberg had become, BP Chairman Carl-Henric Svanberg actually asked for his references. Feinberg offered up a former attorney general, John D. Ashcroft; a university president, Virginia Tech’s Charles Steger; and a top U.S. Treasury official, Neal Wolin.
Sufficiently impressed, BP brought him in to administer a fund that the company created. Feinberg, not a mincer of words, flatly describes BP as “a corporate wrongdoer.” This time, he was getting paid: His firm took in a flat fee of $850,000 a month for the first three months, then bumped it up to $1.25 million a month from September 2010 through June 2012.
Feinberg can be self-deprecating at times, but he also seems to have the swagger and elevated sense of self-worth of a man who is used to getting what he wants, when he wants it — and isn’t afraid to tell you that he got it. His default demeanor in the ambit of public relations is hail-fellow-well-met affability, but he seems ever so slightly irked by criticism of his BP compensation, which was given a seal of approval by an ethics expert as well as former attorney general Michael B. Mukasey, who drafted a report sanctioning his pay structure.
“Why shouldn’t I be paid? Why shouldn’t my firm benefit?” Feinberg says. Some large chunk of his fees will go to cover costs and the rest will be split among his partners, although he says he doesn’t know how much profit they’ll realize. “That is nobody’s business,” he says. “We are a private business. Ken Feinberg will do very well. . . . I don’t have to apologize for making this money.”
Over the years, Pitofsky says in an interview, his friend has developed “a thick skin . . . knowing he’s going to take criticism.
“You can’t do [work like Feinberg’s] without some people being brutally unsatisfied,” says Pitofsky, who taught Feinberg at New York University’s law school.
‘A human piñata’
Down on the gulf, Feinberg writes, he became “a human piñata,” yelled at during town-hall-style meetings by business owners who didn’t think he was paying them enough or didn’t think he was paying them fast enough.
“The idea of a white, Yankee, Jewish Bostonian riding in and riding out with the blessing of the administration, funded by BP — there’s a presumption before you even start that you’re treading water,” Feinberg says over coffee one morning.
Rep. Jo Bonner, an Alabama Republican, called the compensation program “a monster.” Bob Riley, then Alabama’s Republican governor, accused Feinberg of unfairly manipulating the claims process. Louisiana’s Republican senator, David Vitter, accused Feinberg of making “empty promises” and delivering “hollow rhetoric.”
Yet others, such as Sen. Mary Landrieu (D-La.) and Obama, who recently invited Feinberg to the White House for a private Oval Office attaboy, have praised his speed and efficiency. Feinberg managed to dole out $6.2 billion in 18 months while sorting through more than 1 million claims and fending off the barbs of impatient politicians and gulf residents. The claims process has been turned over to the courts as part of a settlement with plaintiffs’ attorneys.
Feinberg writes in the book that he made some mistakes, especially “over-promising” what he could accomplish and underestimating the depth of the problems in the messy claims process he inherited from BP. But he pushes back at the criticism by describing the absurdities of what was unfolding and the monumental size of the task, particularly the logistical headache of managing more than 1 million claims.
He says claims were filed in all 50 states. One man filed a claim for the entire $20 billion fund. There were dentists and chiropractors who thought they should be paid right along with the shrimp-boat and beach resort owners. There was even a man who filed a claim in Oslo, then submitted an additional claim asking for compensation because he injured himself in a fall while going to the post office to mail his first claim.
Feinberg defends his work, but it’s interesting to listen to him talk about the philosophy of compensation. He says the programs that he has administered are successes but that they shouldn’t be repeated, or at least not repeated often, because they could set unrealistic precedents. If asked beforehand whether they were good ideas, he says, he would probably have said, “No.”
“These programs are aberrations,” he says. “Bad things happen to people every day in this country. It’s very difficult for me to understand why these people [get paid], not those people. . . . The people who died in [the bombing of the federal building] in Oklahoma City didn’t get paid.”
Through it all, through all the interviews with sobbing victims and the impassioned pleas, Feinberg says he’s never cried in front of the people who were asking him for help. Solomon, you see, decides — he doesn’t blubber. But there was that one night in New York after a wrenching day of talks with relatives of the Sept. 11 victims when he returned to his hotel room and closed the door. There, alone, he shed tears.
It wasn’t quite the padded room in Bethesda. But, on that night, it would have to do.