Who Gets What: Fair Compensation After Tragedy and Financial Upheaval
KENNETH FEINBERG IS a private lawyer best known for administering the September 11 Victim Compensation Fund and the Gulf Coast Claims Facility in the wake of the Deep Horizon oil spill. Feinberg also doled out money on behalf of chemical companies in the 1984 settlement of the Agent Orange litigation, and he distributed philanthropic donations to victims of the massacre at Virginia Tech in 2007. In a different vein, the Treasury Department appointed Feinberg to limit compensation for top executives of companies that received TARP funds—a role that earned him the popular if misleading moniker of “pay czar.” While the September 11 job gave Feinberg the godlike power to adjudicate the value of human life, the TARP job gave him the even more daunting task of telling bankers that they could not earn $20 million a year. Why should this man have been given these powers?
Feinberg’s account begins with the Vietnam War, when the U.S. military spewed Agent Orange, a defoliant, onto the Vietnamese jungle, hoping to deprive enemy soldiers of cover. Years later, veterans complained that Agent Orange had made them ill, and brought a massive tort suit against the eight chemical companies that had manufactured it. Feinberg says that little evidence backed up the veterans’ claims, but the defendants settled and paid $180 million into a fund for victims. The judge who presided over the settlement appointed Feinberg to establish criteria for eligibility for an award. Feinberg was chosen in part because of his political connections—among other things, he was personally acquainted with the trial judge, and he worked for Senator Kennedy, which would open doors for him throughout his career.
Many years later Feinberg became the lead administrator for the September 11 Victims Compensation Fund. Congress set up this fund to provide monetary compensation to the victims of the attack, instructing that payments from the September 11 fund reflect tort principles: roughly meaning, surviving dependents would be compensated for lost income and emotional distress. This meant, according to the lost-income calculation that is fundamental to tort principles, that the families of financiers would receive awards of tens of millions of dollars, while the families of firefighters and janitors would receive awards that were a fraction of the size—an outcome that Feinberg says he regrets because it caused division among the survivors. Uniform emotional distress payments of $250,000 to families of all victims, plus another $100,000 per surviving dependent, ensured that the variation in aggregate awards would not be too extreme.