Huff Post- Jason Linkins
First Posted: 06- 8-10 05:55 PM | Updated: 06- 8-10 09:36 PM
Hopefully, by now, you’ve already read the oil spill apocalypse pieces penned by our own Ryan Grim — who documented “BP’s Long History Of Destroying The World” — and Sam Stein, who got the following diagnosis from a top lawyer in Exxon Valdez litigation: “[I]f you were affected in Louisiana, to use a legal term, you are just f–ked”.
Well, here’s something else depressing that you can add to your oil spill woes. The Exxon Valdez disaster, which occurred on March 24, 1989, played a major role in the collapse of the economy some 19 years later. See, as Stein documented, after lengthy litigation, Exxon managed to get the amount of punitive compensatory damages reduced from the hoped-for $5 billion to a paltry $500 million. But, back when Exxon had reason to imagine it might actually have to part with the $5 billion, the oil giant needed to find a way to cover its hindquarters. Exxon found a savior in the form of J.P. Morgan & Co., who extended the beleaguered company a line of credit in the amount of $4.8 billion.
Of course, that put J.P. Morgan on the hook for any potential judgment against Exxon. So the bank went looking for a way to mitigate that risk. Its solution made history, which you can read about in a June 2009 piece from the New Yorker‘s John Lancaster, entitled “Outsmarted.” Here’s the relevant portion: