The Man Who Will Spend BP's Money

Kenneth Feinberg will evaluate the salaries of 25 executives at the seven largest firms receiving bailout assistance. Special master at the Treasury Department
AP Photo/Charles Dharapak
Settling the claims of oil spill victims is an unenviable job. And as Richard Schlesinger of "48 Hours" now tells us, the number of qualified candidates to take it on is very small indeed - namely Kenneth Feinberg:

An update of an interview originally aired February 21, 2010:

He may be the one man considered trustworthy enough to spend 20 billion of BP's dollars fairly.

Kenneth Feinberg has learned how by wading into some of this nation's biggest man-made disasters. He's gotten earfuls from people suffering through the worst kind of loss, and handed out fistfuls of money to try to make things better.

"How much of that is an honor, and how much of that is a burden?" asked Schlesinger.

"Not a burden at all. It's all an honor," said Feinberg. "It's not a burden to be called on, to try your hand at another intractable problem."

His latest assignment - giving away BP's money - is a switch from his last assignment, taking AWAY money from bank executives' paychecks after the financial collapse.

His official title: Special Master … but he came to be known as the Pay Czar, a term he dislikes.

"You don't like the term 'czar,' 'pay czar'?" Schlesinger asked.

"No," Feinberg said. "That implies that I'm issuing imperial edicts on pay."

Bankers probably have other names for him. Armed with a Congressional statute, he showed the Masters of the Universe the New World Order, slashing pay and perks at financial institutions that took federal bailout money.

But for a Czar, he's very unassuming.

"There was never any authority of mine beyond 25 people in each of those companies," he said.

But what a group of 25 they were - some of the richest men in the world, running some of the most powerful companies in the world . . . until Ken Feinberg.

"Well, they put on their jacket like you and I do," he said. "We try and implement the statute."

Just like that. Matter of fact. It's his style. And it's served him well over the past 25-plus years as he's carved out his role as the go-to guy for the very toughest jobs.

More than a learned attorney, he's become an expert assessor of the value of life itself. He wields the kind of power with which no politician would ever be trusted.

His Massachusetts roots are as obvious as his accent. He was born in a working class section of Brockton, outside Boston.

"My father was a tire salesman in Brockton," Feinberg said. "My mother was a bookkeeper at the local community center. You learn about friendship in a small town like that, and you learn how important it is to respect other people."

Before long, other people began to respect him . . . important people. He became Ted Kennedy's chief of staff before he left to become a Washington lawyer.

He became a star as a mediator in 1984. Vietnam veterans had sued the manufacturers of the defoliant Agent Orange; they said it made them sick. The companies denied it all.

After an eight-year legal fight yielded nothing, Ken Feinberg negotiated a settlement in just 6 weeks.

"The first day that I mediated that case, I said to them together, 'Chemical companies, what are you willing to put up?' They said together, 'All eight of us will put up $25,000.' Then I asked the Vietnam veterans. They said, 'We want $1.2 billion.'"

"If it were me, Day One, one side said $25,000 and the other side said $1.2 billion, I would think . . . "

"You know, you have to be a little bit better chess player, Richard," Feinberg said. "If one side says $25,000 and one says $1.2 million, there's plenty of room to move. They're here to participate."

But that case was nothing like what came next. After the 9/11 attacks, he volunteered to decide how much money each family of victims would get from a compensation fund Congress set up.

Feinberg was used to dealing with lawyers representing victims. Here he came face-to-face with unfiltered emotion and anger.

"You have an arrogance about you that is so painful you can't possibly believe it. You hurt me.".

"Oh, I misjudged that," he said. "For the first year, I was at odds with these families. I had a lawyer's disposition in trying to deal with families in grief and anger."

Congress ordered Feinberg to use each victim's earnings to help establish the value of every life lost. The lives of a banker and busboy were valued differently, even though they both ended the same way.

"Money equals economic value; it does not equal moral worth," he said. "I tried to explain to these families, quite unsuccessfully, that I was not attempting at all to value the moral integrity or the intrinsic worth of any individual. I was simply applying that cold calculus."

"I think he was caught off-guard emotionally and personally by how affected he was by 9/11," said Michael Feinberg, the oldest of his three children. "And it changed him, I think. Any free time he had was spent listening to music."

Ken Feinberg explained, "Because from 7:00 in the morning to 7:00 at night, you are dealing with the fallout from the most barbaric, the most callous tragedy in American history. You got to escape somehow from that or you'll go mad."

"And when he would come to his friends or his family members, he would bring issues that he had and he would say, 'How would you solve this?'" Michael said. "He was always looking for ways to solve the problem."

"It was not his job to leave my three children and myself alone for the rest of our lives," one family member said.

He worked for almost three years, never took a penny in pay, and gave out about $7 billion. All but a handful of families eventually decided Ken Feinberg represented their best option.

"Although it is difficult, Mr. Feinberg, the fund has treated my family very reasonably and very fairly," one family member said.

But he's still haunted by one woman who couldn't handle any of it.

"She lost about $2 million tax-free by being so paralyzed by grief she couldn't even sign the application that I brought to her doorstep," he said. "How do you forget stories like that?"

"But that one seems to have been one the one that really sticks with you," said Schlesinger.

"It sticks with me because I failed, you see."

But he got high enough marks for handling the 9/11 fund that about 3 years later, when a student gunman killed 32 people and himself at Virginia Tech, authorities turned to Feinberg once more to decide who deserved how much.

"Virginia Tech involved the serendipitous, haphazard nature of death," Feinberg said. "Here's a school, rural Virginia. You say to yourself, 'Nowhere are you assured of being safe, no matter what you do.'"

And now the man who dealt with people who lost so much . . . is dealing with people who WANT so much.

And now the man who dealt with people who lost loved ones is dealing with people who want so much.

After the financial meltdown, when Congress bailed out the banks, it ordered the Treasury Secretary to control the salaries and bonuses of the top executives, and Secretary Timothy Geithner went to the go-to guy, Ken Feinberg.

"It doesn't have the same impact as 9/11 or Virginia Tech. How could it?" Feinberg said.

"How do you avoid looking at these guys on the other side of the table and say, 'You're just a bunch of greedy so-and-so's," asked Schlesinger.

"No. You don't say 'They're greedy so-and-so's.' You say, 'You're vastly overpaid.'"

However he said it, few bankers wanted to hear it. And BP executives will soon learn what the bank executives learned - that after all Ken Feinberg has seen . . . the greed the grief and the grace . . . he doesn't just speak with legal authority; he speaks with no small amount of moral authority, earned during the toughest crises this nation has faced.

"All of these problems, these challenges are different - every one is different," Feinberg said. "The 9/11 fund will never be repeated, It was a horrible tragic program involving the deaths of 3,000 people. But this is a tragedy here in the Gulf. No question about it. It's emotional, it's real."

Feinberg has his hands full. He's still tangling with Wall Street executives, and the week before last he was given the job of reviewing old claims from 9/11's first responders.

But he's promised to begin pay-outs in the Gulf quickly, starting in 30 days. He has more money to spend on the oil spill than he has ever had before, and he is ready and able to see how much wrong $20 billion can make right.