Congressional Democrats Demand BP Suspend Its Dividend, Undermining the Global Free Market Economy and Further Endangering the Environment

Everybody is scared and upset by the tragedy in the Gulf, but Congressional Democrats are behaving irresponsibly.

The Democrats in Congress today clearly took aim at British Petroleum, demanding that the company suspend its dividend in order to pay for the Gulf cleanup.

To be clear, the Gulf oil spill is a disaster of untold proportions. The damage that has been done to the Ocean is simply beyond comprehension. BP's apparent lack of any sort of contingency planning is simply unfathomable. The company's constant missteps have been extraordinary and it needs to be made to pay for the damage that it has done. The Attorney General should examine whether criminal charges should be brought at the appropriate time.

At the same time, it needs to be recognized that we live in a country were due process is recognized and where we don't operate like a Third World dictatorship seizing assets and directing how a company is to perform its global operations.

There are many retirees in the UK who rely on the BP dividend for their living, either directly through share holding or through pension funds that own the stock. While BP's liability my ultimately impair the dividend, where the legislature proposes preemptive action to require BP to suspend its dividend risks setting off forced selling that will send the company into an immediate death spiral.

Where legislature oversteps its bounds and dictates what dividend policy a company should pursue, it undermine the basic tenets of a free market and a global economy. It undermines the corporate relationship with shareholders and the very stability that investors require to deploy capital.

The scariest part of the entire thing, however, is that we are relying on British Petroleum to stop an ongoing ecological disaster at the same time as our government has decided to tie their hands and dismember them.

Ari Socolow
Ari Socolow: Ari Socolow is the Chief Economist and Editor-in-Chief at BestCashCow. He is particularly interested in issues relating to bank transparency and the climate crisis. Since co-founding this website in 2005, Ari has been frequently cited in the media as an expert on local and national savings accounts, CD products, mortgage and loan products and credit card rewards products.

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  • H00tz

    June 10, 2010

    No, it is *not* British Petroleum.
    The name was changed to BP when British Petroleum merged with Amoco (an *American* oil company, I'll have you know) in August 1998.

    Yours helpfully,
    One of the Brits that relies on BP dividends for living expenses.

  • Jeff Richardson

    June 10, 2010

    Ultimately the Iran-loving management team goes to a penitentiary, but there is no reason to delay a bankruptcy. The damage here in La. is unspeakable. The process should be not different because a bunch of Brits count on the dividend. Nobody was concerned about stockholders at Enron or Worldcom or Lehman. They failed quickly after their crimes and they didn't destroy a way of life for everyone down here.

  • Jen S. Robbins

    June 10, 2010

    In a global economy, you invest in companies that do business all over the place. If that company commits a crime in one country - it has consequences to you. We need BP's assets to clean up this mess. Obama needs to close it down. Cameron is stepping in the wrong place now.

  • jtr III

    June 10, 2010

    Obama still doesn't have a plan. He needs BP to stop the leak so he's got to take his boys off the air and stop the attacks for now. Agree with the article, not the comments.

  • H00tz

    June 11, 2010

    Quote "If that company commits a crime in one country - it has consequences to you."

    Couldn't agree more - so where is (American) Union Carbide in cleaning up the Bhopal mess? - answer=they walked away.
    How about when (American) Occidental Petroleum's Piper Alpha oil rig blew up in the North Sea killing hundreds - I don't recall UK residents getting all fired up and "putting a boot on the throat" of Occidental.

    Yes, this is a disaster. But lets stop with the British bashing and realise that often American companies are as bad, if not worse than any other global multinational whether based in the UK or elsewhere.

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