AsbestosAsbestos Legislation
The Games "FAIR" Asbestos Corporations and Politicians are Playing
On January 30, 2006 USG Corporation announced it had reached a settlement to resolve its asbestos related liabilities, allowing it to emerge from bankruptcy. While in bankruptcy, USG's sales have hit record levels. Profits have soared. And USG's stock price has climbed to $97.
Interestingly, a 2003 study examined some major firms which filed for "bankruptcy" in the face of asbestos claims. In addition to USG, the firms were Babcock & Wilcox, Owens-Corning, Armstrong World Industries, Building Materials Corp. of America, W.R. Grace & Co. and Federal Mogul. The study found that each of the firms remained viable and profitable. Total employment increased or did not significantly decline. All met their obligations to fund employee pensions. And, based on capital expenditures, all had bright prospects for the future.
What USGs results and this study demonstrate is that claims by Senator Arlen Specter and Senate Majority Leader Frist that the so called FAIR Act , S.852, is necessary to stop job losses, speed payments to truly sick and increase the competitiveness of American Corporations are complete nonsense. What the so called "FAIR Act" really does is to give highly competitive and profitable corporations a gargantuan legislative gift at the expense of asbestos claimants and small companies.
The first plain-as-day example of this legislative gift comes from the USG "bankruptcy". Under the terms of the USG's proposed settlement, USG will pay $900 million into a victims' compensation fund. Additionally, if the "FAIR Act" is not passed, USG will provide an additional $3.05 BILLION to the compensation fund (that's correct, an additional $3.05 BILLION, with a "B"!). This is a settlement said to be "affordable" by USG CEO William C. Foote, who received over $3 million in compensation in 2005. But, if the "FAIR Act" is passed, USG's payments to the compensation trust will remain at $900 million, its estimated payment under the "FAIR Act". In effect, Senators Specter and Frist will be taking away $3.05 BILLION from claimants and giving it USG. Not surprisingly, despite its "affordable" settlement with asbestos creditors, USG intends to continue its support of the "FAIR Act".
Another not so plain-as-day example of the legislative gift that Senators Specter and Frist are attempting to bestow on firms at the expense of claimants comes from the Armstrong World Industries "bankruptcy". After lengthy negotiations with all stakeholders, a Plan of Reorganization for Armstrong was filed with the Federal Bankruptcy Court in May 2003. Importantly, the Plan provided that $1.8 BILLION of assets (that's right, another BILLION, with a "B") would be placed into a trust for asbestos personal injury claimants. This plan was initially approved by the Armstrong Unsecured Creditors Committee, one of the stakeholders. However, as the likelihood that passage of the "FAIR Act" increased, the Armstrong Unsecured Creditors Committee pulled their support of the plan because the "FAIR Act" would require Armstrong to pay only $805 million, far less than the $1.8 BILLION previously agreed to under its reorganization plan. Ultimately, the reorganization plan was not approved.
The "FAIR Act" has significant problems- funding issues, transparency of funders, the creation of another federal bureaucracy, constitutional violations, shortfalls, expediency, efficiency, etc.- none of which Senators Specter or Frist much care to acknowledge or attempt to cure. The two examples previously alluded to indicate that claimants would receive at least $4 Billion more (3 from USG, 1 from Armstrong) just from the settlement processes already in place than under the "FAIR Act". But, what the "FAIR Act" really demonstrates is the desire by politicians at the behest of lobbyists and corporations to continue to help the well-connected and very wealthy at the expense of those with less of a voice in the Washington, D.C. Perhaps it should be called the "Not Fair to Asbestos Victims Act".
