"Relentless Efforts to Stop the Leak and Contain the Damage"

This morning the President met with members of his Cabinet to get another comprehensive update on the ongoing Administration-wide response to the disastrous BP oil spill in the Gulf region. The President made clear his frustration with BP and the other parties involved in the spill, committed once again to ensuring they are held accountable for picking up the tab, and recapped the Administration’s efforts to tighten up the regulation of offshore drilling sites.
He began with the top priorities, however:

The potential devastation to the Gulf Coast, its economy, and its people require us to continue our relentless efforts to stop the leak and contain the damage.  There’s already been a loss of life, damage to our coastline, to fish and wildlife, and to the livelihoods of everyone from fishermen to restaurant and hotel owners.  I saw firsthand the anger and frustration felt by our neighbors in the Gulf.  And let me tell you, it is an anger and frustration that I share as President.  And I’m not going to rest or be satisfied until the leak is stopped at the source, the oil in the Gulf is contained and cleaned up, and the people of the Gulf are able to go back to their lives and their livelihoods.
Now, the most important order of business is to stop the leak.  I know there have been varying reports over the last few days about how large the leak is, but since no one can get down there in person, we know there is a level of uncertainty.  But as Admiral Thad Allen said today, our mobilization and response efforts have always been geared toward the possibility of a catastrophic event.  And what really matters is this:  There’s oil leaking and we need to stop it –- and we need to stop it as soon as possible.  With that source being 5,000 feet under the ocean’s surface, this has been extremely difficult.  But scientists and engineers are currently using the best, most advanced technology that exists to try to stop the flow of oil as quickly as possible.
Our second task has been to contain the spill and protect the Gulf Coast and the people who live there.  We are using every available resource to stop the oil from coming ashore.  Over one million feet of barrier boom have been deployed to hold the oil back.  Hundreds of thousands of gallons of dispersant have helped to break up the oil, and about four million gallons of oily water have been recovered; 13,000 people have been mobilized to protect the shoreline and its wildlife, as has the National Guard.

The President also discussed the draft legislation sent to Congress this week to ensure that the government can respond as needed, and talked about accountability:

I know BP has committed to pay for the response effort, and we will hold them to their obligation.  I have to say, though, I did not appreciate what I considered to be a ridiculous spectacle during the congressional hearings into this matter.  You had executives of BP and Transocean and Halliburton falling over each other to point the finger of blame at somebody else.  The American people could not have been impressed with that display, and I certainly wasn’t. 
I understand that there are legal and financial issues involved, and a full investigation will tell us exactly what happened.  But it is pretty clear that the system failed, and it failed badly.  And for that, there is enough responsibility to go around.  And all parties should be willing to accept it.
That includes, by the way, the federal government.  For too long, for a decade or more, there has been a cozy relationship between the oil companies and the federal agency that permits them to drill.  It seems as if permits were too often issued based on little more than assurances of safety from the oil companies.  That cannot and will not happen anymore.  To borrow an old phrase, we will trust but we will verify.
Now, from the day he took office as Interior Secretary, Ken Salazar has recognized these problems and he’s worked to solve them.  Oftentimes he has been slammed by the industry, suggesting that somehow these necessary reforms would impede economic growth.  Well, as I just told Ken, we are going to keep on going to do what needs to be done.
And so I’ve asked Secretary Salazar to conduct a top-to-bottom reform of the Minerals Management Service.  This week, he announced that the part of the agency which permits oil and gas drilling and collects royalties will be separated from the part of the agency in charge of inspecting the safety of oil rigs and platforms and enforcing the law.  That way, there’s no conflict of interest, real or perceived.

He closed on a note of concern for those most affected:

The people of the Gulf Coast need our help, and they deserve nothing less than for us to stand up and do whatever is necessary to stop this spill, prevent further damage, and compensate all those who’ve been harmed already. That’s our job.
It’s also our job to make sure this kind of mess doesn’t happen again.  It’s a job we’ve been doing.  It’s a job we will keep doing until the well is capped and the spill is cleaned up, and all claims are paid.

The Ongoing Administration-Wide Response to the Deepwater Horizon Oil Spill

Prepared by the Joint Information Center

UPDATED May 13, 2010 7 PM

* For a full timeline of the Administration-wide response, visit the White House Blog.

PAST 24 HOURS

Secretary Salazar Announces First Steps in MMS Restructuring

As the federal government continues its relentless response to the Deepwater BP Oil Spill and investigates the cause of the explosion and oil spill, Secretary Salazar directed Assistant Secretary for Policy, Management and Budget Rhea Suh and Senior Advisor Chris Henderson to oversee a restructuring of the Minerals Management Service that will ensure the independence of the agency’s inspections and enforcement mission.

Secretary Salazar also sent a letter to Congressional leaders asking for their ideas and input on his plan to reform the agency.

Officials Inspect Rig Preparing to Drill Relief Well

National Incident Commander and Coast Guard Commandant Admiral Thad Allen and Federal On-Scene Coordinator Rear Admiral Mary Landry inspected the Development Driller II, which is set to begin drilling the second relief well shortly to permanently cap the leaking well. 

BP’s “Top Hat” Containment System Approaches Completion

MMS reports that BP has approached completion of the “top hat” containment system, and expects an update from BP as early as tomorrow on its operational status.

Community Town Hall Held in Port Sulpher and Dulac, La.

Representatives from the Coast Guard, EPA, NOAA, the Department of the Interior, the Department of Labor, the Agency for Toxic Substance and Disease Registry and BP participated town hall meetings in Port Sulpher and Dulac, La., to provide an update on the response to the oil spill and continue the dialogue with members of the community, local business leaders and other organizations.

Shoreline Cleanup Teams Continue to Assess Impact

Shoreline Cleanup and Assessment Teams (SCAT) surveyed 19 miles of Dauphin Island, Ala., and the Jackson County shoreline with minimal tarball findings. An additional five teams were deployed to Bon Secour National Wildlife Refuge to recovery tarballs.

The Department of the Interior has deployed 568 total personnel to the affected area to assist in cleanup, wildlife protection and rehabilitation, and shoreline assessment efforts. 

Unified Area Command Continues to Build Web and New Media Engagement

The Unified Area Command in Robert, La., continues to grow its public engagement via its website (www.deepwaterhorizonresponse.com), which has received more than 19 million hits since it was launched on April 23, as well as Facebook (18,277 users) and Twitter (3,707 followers). These resources contain information about response efforts, jobs, volunteer opportunities, impacts to wildlife and other important public information.

DOD Aircraft Conduct Dispersant Spray Missions

The Department of Defense’s Modular Aerial Spray System (MASS) aircraft flew multiple missions—dispensing the same dispersant chemicals being used by BP and federal responders. These systems are capable of covering up to 250 acres per flight, and flights are coordinated with the EPA and the State of Louisiana to ensure all environmental concerns are addressed. Since MASS flights began on May 1, a total of 47 missions have been flown and nearly 70,000 gallons of dispersant have been applied.

National Guard Support Continues to Build

1,304 National Guard personnel are currently supporting oil response—952 from the Louisiana National Guard are providing Command and Control and sandbagging support to St. Bernard and Plaquemines parishes, supporting marina operations and conducting HAZMAT training; 323 from the Alabama National Guard are deploying protective barriers around Dauphin Island and conducting sandbag and security operations; 25 from the Mississippi National Guard personnel are providing helicopter support and liaison officers to aid local officials with emergency response; and four from the Florida National Guard are performing liaison duties in support of the response effort to the Unified Command Center in Alabama and to its own emergency operations center in Tallahassee.

Five Oil Platforms Have Been Evacuated to Ensure Health and Safety

A total of five platforms have been evacuated in order to ensure the safety and health of rig workers. Estimated oil production shut-in is 2,300 barrels a day (0.14 percent of the Gulf ‘s oil production) and approximately 1.2 million cubic feet of gas (0.02 percent of the Gulf’s gas production).

Joint Bird Rescue Operations Are Dispatched

U.S. Fish and Wildlife Services and the National Parks Services dispatched a joint boat operation to Horn Island, Miss., to recover potentially oiled wildlife and transport them to a wildlife rehabilitation center for treatment. Treatment and rehabilitation operations are also ongoing on Chandeleur Island.

By the Numbers to Date:

-      Personnel were quickly deployed and approximately 13,000 are currently responding to protect the shoreline and wildlife.

-      More than 520 vessels are responding on site, including skimmers, tugs, barges, and recovery vessels to assist in containment and cleanup efforts—in addition to dozens of aircraft, remotely operated vehicles, and multiple mobile offshore drilling units.

-      More than 1.4 million feet of boom (regular and sorbent) have been deployed to contain the spill—and approximately 1 million feet are available.

-      Approximately 5 million gallons of an oil-water mix have been recovered.

-      Approximately 476,000 gallons of dispersant have been deployed. More than 217,000 gallons are available.

-      14 staging areas have been set up to protect vital shoreline in all potentially affected Gulf Coast states (Biloxi, Miss., Pascagoula, Miss., Pensacola, Fla., Panama City, Fla., Dauphin Island, Ala., Grand Isle, La., Shell Beach, La., Slidell, La., Venice, La., Orange Beach, Ala., Theodore, Ala., Pass Christian, Miss., Amelia, La., and Cocodrie, La.).

Transocean hires U.S. lobby firm to work Congress

 By David Morgan

WASHINGTON, May 13 (Reuters) - Transocean Ltd (RIGN.S), one of the companies under fire over the massive oil spill in the Gulf of Mexico, has hired a new lobby firm to represent its interests in Congress, according to public records.
Capitol Hill Consulting Group, chaired by former U.S. Representative Bill Brewster of Oklahoma, registered as a lobbyist for Transocean on May 10, a day before the Swiss-based company began appearing before the Senate and House of Representatives oversight committees to answer for the leaking BP Plc (BP.L) well.
The disaster threatens to engulf oil giant BP, Transocean and other companies involved in the offshore drilling industry in a new era of government scrutiny and regulation.
Capitol Hill Consulting declined to comment on its new role. Transocean officials were not immediately available for comment.
Transocean is the owner of the Deepwater Horizon drilling rig that exploded and sank off the coast of Louisiana last month, setting off a huge oil leak that is still spewing crude from 5,000 feet (1,500 metres) beneath the ocean surface.
Congressional investigators concluded this week that a rig device designed to cut off the flow of oil after an explosion was faulty.
Executives for BP and subcontractor Halliburton Co. (HAL.N) appeared alongside Transocean President Steven Newman this week at hearings on Capitol Hill.
The lobbying firm's registration document names Brewster as one of three who will actively represent Transocean on environmental, natural resources and energy issues.
The former Democratic lawmaker served in Congress from 1991 through 1997. In 1994, Brewster formed a caucus of lawmakers from oil-producing states called the Congressional Oil and Gas Forum, and served as its first chairman. He also was a founding member of the Blue Dog Coalition, an influential group of pro-business congressional Democrats.
Transocean moved its headquarters to Switzerland from Houston in 2008 to save on taxes and get closer to its Eastern Hemisphere clients.
The company has not been a prominent political spender up to now. Since 2008, the company has spent less than $100,000 lobbying Congress on tax issues, documents filed with the Senate Office of Public Records show.
Transocean employees and other associated individuals have also spent a little more than $10,000 in campaign contributions to members of the House and Senate, according to the nonpartisan Center for Responsive Politics. (Editing by David Storey)

Senator Kaufman Was Right – Our Financial System Has Become Dangerous

with 134 comments

By Simon Johnson, co-author, “13 Bankers: The Wall Street Takeover and The Next Financial Meltdown“
Update: link to Senator Kaufman’s speech yesterday
Senator Ted Kaufman (D, DE) is best known these days for arguing that, as part of comprehensive financial reform efforts, our biggest banks need to be made smaller.  His advocacy on this issue helped build support around the country and forced a Senate floor vote on the Brown-Kaufman amendment, which was defeated 33-61 last Thursday.
Senator Kaufman has also pushed strongly the idea that in recent years there was a pervasive “arc of fraud” within the mortgage-securitization-derivatives complex.  This thesis also seems to be gaining traction – according to the WSJ today, the criminal probe into this part of the financial sector continues to develop.
But the Senator’s biggest home run has been on a different issue: his warnings about the dangers of high-speed trading, involving “dark pools” of money, appear to have been completely vindicated – ironically enough, also last Thursday.
Think about it this way.  The US stock trading system, long-established and widely thought to be robust, crashed on Thursday afternoon.  Widely held stocks, traded with consistent liquidity, do not fall in value from $40 to 1 cent and then bounce back again – even in emerging markets, let alone in the United States.  It is true that complex systems crash, but given the infrastructure and back-up systems involved here, this is much closer to east coast air traffic control shutting down for 15 minutes than it is to your local cable company having a problem.
And here’s the most remarkable point – after 6 full working days (and top people do sweat this kind of issue on the weekend), we are still no closer to really understanding what happened.  To be sure, there are plenty of theories – and no shortage of proposals for avoiding a recurrence.  But, despite the evident resources thrown at this problem, we do not know what went wrong.
As Senator Kaufman points out, the SEC does not even routinely collect the data it needs to understand the actions and impact of large traders.
The Merkley-Levin amendment would also likely be a step in the right direction, in terms of reducing the socially dangerous casino nature of our financial markets.  But it is far from enough.
The rationale for organizing our financial system as we do is that this leads to a reasonable allocation of capital across the economy.  We can argue the merits of this proposition at various levels – but no one would suggest that the extreme volatility and breakdown of trading last week was anything other than completely dysfunctional.
The SEC is, without question, beginning to get its act together under Mary Shapiro.  But there is also no doubt that it needs to lift its game to a much higher level, if regulation is even to catch up with how markets have developed over the past decade – just look at this timeline of problem identification and policy response.
Senator Kaufman has flagged mortgage-related fraud, high-speed/dark-pool trading, and bank size as pressing issues to address.  He was completely right on trading and, based on what we know so far, also right on fraud.
How long before he is completely proved right on the dangers posed by excessive bank size?