Preet Bharara: Ken Feinberg, thanks so much for making time to be on the show.
Ken Feinberg: Glad to be here today.
Preet Bharara: So you and I have some things in common. I’ve never administered a multi-billion dollar compensation fund, but you and I were both assistant US attorneys in the southern district of New York. You and I both worked on the senate judiciary committee. How was your experience on the committee?
Ken Feinberg: Well I was very fortunate because when I worked on the Senate Judiciary Committee from 1975 until 1978, it was a very bipartisan consensus senate where I worked for Senator Kennedy. And Senator Kennedy got along very well with Senator Thurmond, and Senator Hatch. And we managed to accomplish a great deal. And I worked with then Chief Counsel Stephen Breyer, and then Special Counsel David Boies. So we had a very good time.
Preet Bharara: That’s quite the staff. You’re still friendly with Justice Breyer right?
Ken Feinberg: Very very close, we’re very close friends.
Preet Bharara: Does he tell you what he thinks of his new colleagues on the court?
Ken Feinberg: He says everybody works together very very well. He’s a politician still.
Preet Bharara: So it’s wonderful just like the committee back in the old days on the court?
Ken Feinberg: That’s correct, right.
Preet Bharara: Why did you go work on the Senate?
Ken Feinberg: I was in the southern district doing criminal cases and I got were through a mutual friend that Senator Kennedy needed somebody on his Judiciary Committee staff with expertise in criminal law, substantive criminal law. So I applied, and I was a former Massachusetts resident, and a supporter of Senator Kennedy.
Preet Bharara: I couldn’t tell, I couldn’t tell from the accent.
Ken Feinberg: And I went and interviewed, and he offered me the position, and I took it.
Preet Bharara: Why do you think people got along better and on a more bipartisan basis than they do now?
Ken Feinberg: Well there’s recent book about this by Ira Shapiro on the great Senate. And one reason is I think that you had some real giants in the Senate during those days, who saw the Senate as an institution much differently than it’s seen today. And also there were plenty of disagreements, but it was a much more consensus-driven institution, where everybody tried at least to find some common ground.
Preet Bharara: You think everyone should read that book, or do you think that we are on track to become even more embittered and more polarized in Congress? Or do you see any path to get back to the time when people got along even if they disagreed on policy?
Ken Feinberg: Well it’s a murky crystal ball. Part of the problem is institutional in terms of what the Senate’s become, and the house. Part of the problem I think is leadership, and setting an example. And I think that I’m an inherent optimist that eventually there will be return to the days of more consensus and more getting along, certainly hope so.
Preet Bharara: Hope springs eternal. Yeah I wonder if you had a similar experience to mine, which was after having spent five years as an assistant US attorney actually trying criminal cases, appearing in court, understanding the statutes, understanding the limitations of the job we had and SDNY and then going to the Senate, on the Judiciary Committee, and working on legislation and see how the sausage is made. Every once in a while I was a bit taken aback it how laws were formulated in conference rooms often populated by lots and lots of people who knew nothing about how the law worked and had never practiced law, much less criminal law. Did you find that disconcerting ever?
Ken Feinberg: No. I was lucky because when I was working on the committee, I was working hand-in-glove with the Department of Justice in Washington, attorney general Edward Levy and his people, then soon Justice Scalia, Doug Marvin, Rodger Polly. Civil servants who educated me, and educated the committee, and educated the Senate on the strengths and weaknesses of certain legislation. It was while I was in the Senate, working for Senator Kennedy, that I was asked by attorney general Levy to sit down with his staff and work out, for the first time, the foreign intelligence surveillance court.
Ken Feinberg: And Senator Kennedy, the Democrat, introduced for President Ford and attorney general Levy that legislation, which ultimately became the law, and has since been an important part of the National Security apparatus. So I was lucky, I didn’t confront uneducated or on the job training associated. I worked overwhelmingly with very experienced people at DOJ, that taught me a thing or two frankly.
Preet Bharara: Right, And probably taught other staffers on the committee as well.
Ken Feinberg: Right.
Preet Bharara: How much did Ted Kennedy joke around back then? I know him a little bit from that time working in the senate for Senator Schumer, and I don’t remember a time when the two of them interacted and there wasn’t some amount of comedy that took place.
Ken Feinberg: Oh, There was tremendous. Kennedy used to have shouting matches on the floor of the Senate with Senator McCain, John McCain of Arizona. And then you would see them after the shouting died down and they went into the Senate back room, and they would be laughing, and chuckling it up, and holding each other by the arm. And that was the way Kennedy operated. Kennedy was a very very savvy, friendly, and sensitive senator. And I think the history books demonstrate his role as a giant in the Senate when he was there. And he was there for 45 years don’t forget.
Preet Bharara: And one of the things I thought about that, I knew him a little bit later in life, not long before he passed away. That here’s a person who has a lot of money, who has proven a lot. And whenever you think of him, and people on one side of the aisle didn’t like at his ideas, but that guy worked really hard. And I would see him from when I was working late on the television screen to every staffer has in their office, and it would be 9:00 at night and he would be railing about some immigration bill or amendment, and no one else is in the chamber. And he could have been home, or at a fancy restaurant having dinner somewhere, and he was there in his 70s giving a full-length, full throated speech on immigration, which he cared about. And not everyone did that.
Ken Feinberg: No, That’s right. I think that everybody acknowledged how hard he worked, and how diligent, and how determined he was to try and get things done up there. He always used to tell me that the perfect is the enemy of the good. The other thing you’ll be familiar with is the way that the Senate worked in those days. One day in the 1970s I was a young staffer. Kennedy said to me, “Come on I want you to see how this place operates.” And he took me down to see the chairman of the committee, Senator James Eastland of Mississippi. Art segregationist, fought every civil rights law that was ever proposed.
Ken Feinberg: Kennedy walked into Senator Eastlands office and he said, “Mister chairman, I’m here because there are four Federal District Court vacancies. One in Massachusetts, one in New York, one in California, one in Rhode Island. And I’m here to ask the chairman if we can please move these nominations forward as quickly as possible.” And Eastland looked at him and he said, “Ted, you want these four quickly move through? Well I’m going to tell you what I’m going to do. A week from Tuesday I’m going to hold a hearing on these four, and I’m going to chair the hearing. And we’re going to get those four up and out within an hour. And please notify the four candidates, the nominees, that we’ll be moving these four promptly.”
Ken Feinberg: Kennedy said, “Well thank you Mr. Chairman.” He starts to leave and the Chairman Eastland says “No no no, wait a minute Ted. I’m also going to put on the agenda for that day four other nominees for Mississippi, Georgia, Louisiana, and Sam Ervin has one he wants from North Carolina. Now I don’t want any trouble on those four, and we’ll put all eight up, we’ll blow them through in an hour.”
Ken Feinberg: And I said to Senator Kennedy afterward, “You know two of those, that one from Mississippi, or that one from Georgia, they are very very anti civil rights.” And Kennedy looked at me he goes, “You’re learning how things operate here. I need these four for Javits, for Kennedy, for Alan Cranston of California. I mean Ken, this is the way things operate here.” And all eight got through, and we moved on. Those days are yesterday.
Preet Bharara: There was one time early in my time as a staffer on the committee, I was standing just off the senate floor, and I was briefing Senator Schumer on something. And for no reason in particular he calls over Ted Kennedy, who is walking by, he says “Teddy come over here.” And he looks at me and he looks at Ted Kennedy and he says, “I don’t know if you’ve met my new counsel, Preet Bhara, he’s from Ireland.” And I don’t look very Irish, and Ted Kennedy just started laughing with that big belly laughter. I didn’t really understand the joke, and I walked away. But they had a lot of fun.
Ken Feinberg: They did.
Preet Bharara: Let’s talk a little bit about what your more recent lives work has been. And one of my favorite quotes about you I don’t know how you’ll feel about it, is the following. Someone once wrote, “Where there is death and suffering, or merely bankruptcy and financial ruin, there oddly enough is Kenneth R. Feinberg.” How you feel about that description?
Ken Feinberg: That’s a pretty fair description of my work the last 35 years I must say. I dread reading the newspaper everyday wondering what the next tragedy is going to mean for me and what I’m doing.
Preet Bharara: How did you begin in this business, which has now been visited upon you time and time again of being the person essentially in control of, to borrow a phrase that was the title of a book he once wrote, who gets what when there’s a huge amount of compensation to be distributed? How did that start?
Ken Feinberg: By pure accident. I was asked by a man you admire I think, federal district judge Jack Weinstein, in eastern district in Brooklyn. We had both clerked 30 years apart for the same judge, Chief Judge of New York Stanley Fold. Weinstein called me up in my law office in Washington and he said, “I want you to get up here and I want to appoint you the special master, the administrator, the mediator, to resolve the Vietnam veterans agent orange product liability litigation. 250,000 class members all Vietnam veterans claiming injury or illness due to exposure to the herbicide agent orange while serving in Vietnam.”
Ken Feinberg: Well I told Judge Weinstein, “I don’t know anything about mediation or the administration of a claims program.” “You’ll be perfect for this. You’ve worked for Senator Kennedy, you’re respected by the Republicans, you know people at the Veterans Administration. I want you to do this.” Well, That was the beginning of a course correction in my life, professionally certainly. In eight weeks, with his help, we settled the class-action, unheard of at that time for about $250 million over 10 years with the eight chemical companies, Dow, and Monsanto, and the others.
Ken Feinberg: And once that case was settled, and once we began distributing money to eligible Vietnam veterans, others started calling me. Will I settle this case, will I settle that case? This airplane crash, asbestos, DES, etc. And then was 9/11 when I got a call from the Attorney General of the United States, John Ashcroft, who asked me to come down and see him. There was a new law enacted by congress to compensate victims of the 9/11 attacks. And he asked me if I would become pursuant to statute, a federal law has been passed, the special Master to design, implementation, and administer that program. And that’s the genesis of my professional career.
Preet Bharara: Before we get more in-depth on 9/11 and some of the other cases, can we take a step back and let me ask you how do you think about, and how should we think about, how to place a dollar value on a life?
Ken Feinberg: I don’t think that’s very difficult at all to do. People think that requires the wisdom of Solomon, but you and I know better. Everyday in every court in every village, Hamlet, city, town in this country, judges and juries place values on lives everyday. What would the victim have earned over a work life? How much more pain, and suffering, and emotional distress equals dollars? It’s sort of like chapter seven of Torts Casebook.
Preet Bharara: Right. Is that the right way to think about how the value a life based on-
Ken Feinberg: Oh I don’t know if it’s the right way. But I’m not prepared, I tell people all the time, I’m not prepared to value dignity, and loyalty, and courage.
Preet Bharara: Is there an argument to be made that many context, I know we don’t do it this way in tort claims that every life is equal?
Ken Feinberg: Absolutely.
Preet Bharara: And if there’s a certain amount of compensation to be had, it should be allocated equally? And there have been some settlements you have overseen that have distributed that way, no?
Ken Feinberg: You’re absolutely right. In fact, most of the settlements that I distribute following tragedy, the Boston Marathon bombings, or the Pulse Nightclub terrorist attack in Orlando, Florida. Or the tragedy in Las Vegas, the shootings at Virginia Tech. All of those cases where I’m called in, I do exactly what you’re suggesting. The money that I have is all privately donated from business and individuals around the nation who have been touched by the tragedy, so they send in money.
Ken Feinberg: Now that money in that program, like the Boston Marathon, is not like 9/11 an alternative to the tort system. It’s a gift. It’s a gift, there’s no release, there’s no requirement. It’s money to be allocated to eligible victims. So what I do is take a certain portion of the money, depending on the amount and the number of dead and injured, all lives are equal. Just as you mentioned a minute ago. Everybody who died in the Boston Marathon, whether you’re an eight-year-old child or a 42-year-old wage-earner, you’re going to get the same $2 million. All lives are equal.
Ken Feinberg: If you were physically injured, all I want to know is how long were you in the hospital as a result of the tragedy? Hospitalization is a pretty good surrogate for seriousness of injury. If you were in the hospital 30 days, and the hospital says that’s the case, I’m going to give you one $1 million. If you were in three weeks, $750,000. Two weeks, $500,000, if I have the money. And we try and streamline it, and make it much more efficient and much less controversial and emotional.
Preet Bharara: How did you settle upon the metric of days in the hospital? Were there back up metrics that you might have used instead?
Ken Feinberg: Well we certainly didn’t have time to bring in experts to evaluate medical records. We didn’t have time to determine the financial wherewithal, the savings of the victims. We have this money, we have to get it out fairly quickly, everybody expects efficiency and speed. Well if I’m going to avoid a huge overlay of doctors, and experts, and medical records. And if I’m going to avoid asking victims to compound the horror by giving me their bank accounts and their stock investment, and what they’re worth.
Ken Feinberg: Brush all of that aside in the interest of speed, and I say “All I want from you if you were injured is a letter from the hospital on hospital letterhead, telling me how long you were in the hospital because of the bombings.” That’s all I want to know. And based on your hospitalization, which is a pretty good barometer I think of how seriously you were hurt, we’ll give you your money. You don’t have to sign anything, it’s a gift, you can do what you want with it. And we got the money out in 60 days.
Preet Bharara: I want to talk about 9/11 a little bit more. When you were the special master of the 9/11 victim compensation fund, is it the case that you thought that your job was to do justice, or something more mundane and then that?
Ken Feinberg: Very much more mundane, very much more mundane.
Preet Bharara: What did you consider your job to be?
Ken Feinberg: My job in that case was to implement and administer a statute that congress had enacted that provided me a blueprint of how I should distribute whatever funds I needed. There were no appropriated funds, it was authorized whatever Feinberg needs, take it out of petty cash from the US Treasury. There’s no appropriated max.
Preet Bharara: But the stature did not set forth in every respect all the standards, and all the guidelines, and other metrics. You had a certain amount of discretion.
Ken Feinberg: A certain amount, you’re right, a certain amount. But don’t forget that statue did layout a very clear tort based methodology. In other words, since the victim had to sign a release not to sue, you knew right away reading that statute that every single individual, 5300 people, were going to get a different amount of money. Because like the tort system, economic loss plus pain and suffering equals your award. Feinberg will authorize it, you don’t have to take it. But if you take it, sign a release I’m done suing. And that at least provided me an anchor from which we had to develop certain guidelines.
Ken Feinberg: For example, the statute said that in order to recover and be eligible, you had to have died or been physically injured, in the immediate vicinity of the World Trade Center, or the Pentagon. Now, you know fully square backwards and forwards, you tell me what is the immediate vicinity of the World Trade Center in that case? We rejected claims brought by people in Jersey City, or Staten Island, on the grounds that that couldn’t be the immediate vicinity of the World Trade Center.
Ken Feinberg: Also, to be eligible you had to have, if you were physically injured, you had to have sought medical attention within, immediately after the attacks. What does that mean? So we came up with the rule I think it was 72 hours you had to have sought medical attention. And if he were a first responder who refused courageously to leave the site, we added some time to make it 96 hours. And we required this because the law sort of laid out certain confines that we put meat on, the skeleton with these regulations.
Preet Bharara: So just so that people understand, the difference between the shooting cases where you administered funds were people didn’t have a lawsuit that they were foregoing, it was a gift as you put it. In which case you went by a certain principle of justice, which is that all lives are equal and everyone gets the same. In this other context, like the 9/11 attacks, people had potentially a cause of action, a litigation that they could bring against for example the airlines. And so part of the goal with respect to the 9/11 case and some others distinct from the shooting cases, was to increase efficiency and get people some analog of what they otherwise have the right to under the common law of tort. And that’s why you had to do it that way. Is that a fair way of distinguishing them?
Ken Feinberg: That is absolutely, I couldn’t say it better myself. That is absolutely right. And fortunately I believe we were proven successful because 97% of all the claimants who came in who lost a loved one on 9/11, on the airplanes, the World Trade Center, or the Pentagon, came into the fund. Only 94 people in total voluntarily opted out, litigated against the airlines, and they all settled their cases five years later. The program worked just as Congress intended.
Preet Bharara: And to your mind, the principal benefit of opting in in the 9/11 case, or these other cases, is what?
Ken Feinberg: Well, speed, certainty, certainty more than anything else. You opt into the 9/11 fund and you will within 60 days with certainty know what you’re going to receive without rolling the dice in a courtroom, years of protracted discovery, and depositions, and cross-examination. Uncertain results with a jury, a third of your award going to your lawyer. And if you can avoid all of that, and come into this very efficient and streamlined certain fund, and know very very quickly what you’re going to get.
Preet Bharara: There’s something else in the statute, which is back to the 9/11 compensation scenario, that was clear and left out, I think as you mentioned, psychological injury. So that means if you were on site at the World Trade Center, you survived, but you have some sort of PTSD, and have been traumatized, and it’s affected your ability to work in material and concrete ways, you couldn’t do anything for those people?
Ken Feinberg: That’s right, they were ineligible. The statute required physical injury. Now people came to me and said PTSD results in a physical injury, I can’t get out of bed, my hand shakes ect. No, We concluded that congress was worried that people all over the United States watching CNN that day on 9/11 might make a claim. I was in Omaha and I turned on the TV, and I couldn’t believe what I saw. I can’t get out of bed in Omaha. So congress required a direct causal connection between the physical injury and the attacks in the immediate vicinity of the World Trade Center or the Pentagon.
Preet Bharara: But you had to meet with people often one-on-one and hear their request for claims. What was that like?
Ken Feinberg: That was the worst part of the job. In fact, I tell people all the time calculating damages is not rocket science. You have to have an adding machine, a calculator, and know chapter seven of the law of torts. The real debilitating part is when you agree, as you must, to meet privately with any individual, family member, or injured victim, or disgruntled victim who wants to meet with the special master. And I met with about 950 separate hearings with victims of 9/11. And that is the debilitating heart-wrenching part of the job, which I think would make most people ineligible to even want to do what I did.
Preet Bharara: Well how did you make it through day after day listening to people’s stories and hearing people please with you, often in circumstances in which you could not help them?
Ken Feinberg: You don’t get through it, really. You do the best you can, you cry in private, not in public. Your boyed, or supported, by Republicans and Democrats, liberals and conservatives. This was an apolitical assignment, I mean everybody was backing you up. John Ashcroft is the Republican attorney general, one of my heroes to this day, for his support. And you’re a professional, you have been asked by President Bush, or in the BP oil spill by President Obama, and you take on that assignment. You’re a professional like you are, and you guard yourself. But you think you’ve heard it all, and then you hear stories from individuals that you just totally fall apart. You can’t believe some of what you hear privately from individual victims.
Preet Bharara: When you began doing this work more and more, I think you’ve said and written that at the beginning in engaging in this kind of professional activity, you were a bit too lawyerly, and you came to understand the importance of empathy. How important is that?
Ken Feinberg: That’s the key you see, empathy. The perception, if not the reality, that you feel for people. I mean all of my wonderful work with [inaudible 00:25:19] in the southern district litigating and engaging very good lawyers, judges, it was wonderful. But when you get into a room with an individual victim, I’ll never forget one of my first hearings a woman came to see me privately, 24-years-old. She was sobbing. She said, “Mr. Feinberg, I understand from your staff and your calculations that you’re going to give me $2 million because my husband, a firefighter, died at the World Trade Center. You’re going to give me $2 million, and my husband and I we have two children, 6 and 4. Now this $2 million that you’re going to give me, I want it in 30 days.”
Ken Feinberg: I said to her, “Mrs. Jones, This is public money, taxpayer money. It may take a little bit longer. We got to go down to the treasury, they’ve got to do their due diligence before they cut a taxpayer check.” “I said 30 days.” I said to her, I said, “Mrs. Jones, Why do you need the money in 30 days?” She said, “Why? Mr. Feinberg, I’ll tell you why. I have terminal cancer. I have 10 weeks to live. My husband was going to survive me and take care of our two children, now they’re going to be orphans. And I have got to get this money, and get a trust set up with a guardian to take care of my two little ones. They’re not going to have a mother or father.”
Ken Feinberg: Well we ran down to the treasury and walked through the check, we accelerate the money, we got the check, and eight weeks later she died. Now that takes its toll much more than day-to-day calculation of damages, stories like that which I heard every day just shook me to my bones.
Preet Bharara: Do you ever think of getting out of this thing to work for that reason?
Ken Feinberg: Well you think about it, but you’re a public servant, like you your whole career. What are you going to tell after 9/11, all right now the Boston Marathon bombing. So you get a call from Mayor Menino in Boston, and Governor Deval Patrick. You grew up in Brockton, Mass, that’s not too far from Boston, we need you up here. Pro bono to set up a program. Well what are you going to say “I’m busy? I can’t take it?” No. So you do it. And I’ve done them, and you get through it. But you pay a price.
Preet Bharara: Has there ever been an assignment like that that you turned down?
Ken Feinberg: I turn down a lot of assignments when you really don’t need anybody like me. I get a call from Fort Hood when those I think 13 soldiers were killed, or San Bernardino a couple of years ago where some people were killed. And they call about setting up a fund and I say, “You guys don’t really need a fund. How much money do you have?” And they say, “Well we’ve raised about a million dollars.” Take the million dollars, divide it by the number of dead and injured, and that’s it. I mean don’t make this more complicated than it has to be.
Preet Bharara: But why does everyone keep calling you?
Ken Feinberg: Because the last one worked. You know all about success, if the last one was successful, so will the next one. He did that one, so let him do this one.
Preet Bharara: You’d think every once in a while there’s a second guy, it’s not always Ken Feinberg.
Ken Feinberg: Be careful what you wish for, because one of these days obviously I’m going to screw up, human nature, I’ll make a mistake. And I’ll just say, “Look I’m out of this. Call Preet, he’ll do it.”
Preet Bharara: How do you make sure you don’t screw up?
Ken Feinberg: You follow the template, you’re very very transparent. People may not want to hear the substantive message, but they certainly respect when you walk into the lion’s den and you explain what you can do and can’t do. I met 300 people in New York after 9/11 in various auditoriums, firefighter widows, people of all sorts. And I said to them, right to the 300, 200, 300 people, “Anybody suffering from purely mental injury, don’t even bother applying.” 2,000 did anyway, and we rejected them, but don’t bother. Well there was a lot of screaming and epithets leveled at me. But I think people respect when you walk in, and you sit down I’m the guy, now what are the questions? I’ll answer them to the best of my ability under the statute and the regulations, and that’s the way it’s going to be. And I think that helps a great deal.
Preet Bharara: How do you respond though to the criticism of this whole process, which is in part an endeavor in denying people their day in court, which a lot of people hail as an important right of an American to have your day in court. And here we are trying to shepherd everyone toward not having their day in court, so that the airlines or some other folks who may have been liable, don’t have to be tied up and perhaps bankrupted by litigation. Is that a valid criticism, or does that miss the point?
Ken Feinberg: I think it misses the point. First of all no one has to come into this program. If you feel you would rather have your day in court, and 94 different people thought that way in 9/11, and went to Judge Hellerstein in the southern district, and Judge Mucasey. So my first answer to that is then don’t come into the program. There will be enough people no matter what that you are going to deter through the tort system wrongdoing. The second thing is I tell people all the time the tort system is so ingrained in the fabric and history of the country, an isolated case like 9/11 isn’t going to change the way we litigate in this country.
Ken Feinberg: You hear all of this talk about tort reform, Feinberg’s 9/11 fund is a model for the future. It’s a model for nothing, it’s not a precedent for anything. I didn’t see any 9/11 fund after Katrina, a thousand people died not flood in Louisiana. There was no 9/11 fund. The idea that you’re going to take public money to compensate private citizens while everybody else fend for themselves, I don’t think that the 9/11 fund is a precedent for the future. It’s an isolated example that ought to be studied in the history books.
Ken Feinberg: The real problem that you have to confront, what do you tell a mother who comes to see me after 9/11 and says, “Mr Feinberg explain something to me. My son died in Oklahoma City when the Albert Mariah building was blown up by a domestic terrorist, where’s my money?” Or, “Mr. Feinberg I don’t get it, my daughter died in the basement of the World Trade Center in the original 1993 attacks committed by the very same type of people. How come I’m not eligible?” Now that, that is a very big problem. It’s a political philosophical problem more than anything else. But trying to explain to people why they’re not eligible for an innocent death of a loved one while everybody else is getting taxpayer money in 9/11, that’s a tough challenge.
Preet Bharara: I mean it’s a problem when the government decides to engage in [inaudible 00:33:01] of a certain type after a singular event in history, people that you’ve described who have lost loved ones in similar situations, but not quite that singular nation changing event of 9/11, have a real gripe that they can put forward.
Ken Feinberg: They absolutely do, they absolutely do. That’s why I try and explain to people all the time I think the 9/11 fund worked, I think it was the right thing to do at the time from the perspective of the American people, not the victims. But don’t ever do it again. Don’t ever take taxpayer money and use it just for a certain number of injured victims, everybody else fend for yourself. I don’t think that’s America.
Preet Bharara: This is not a great analogy or parallel, but there is sometimes things that happened in the country and in the world where you have to do something special to heal some wounds and to make people whole. Even if it’s not across generations and across incidence over time. Perfectly equal and perfectly just, again this is not a great analogy, but there’s a reason for the Marshall Plan, there’s a reason for the GI Bill. There are reasons why public money was used to help people in a particular context when that money was not used to help similarly-situated people in other contexts, because some people thought perhaps correctly, this event was so catastrophic. and ripped at the fabric of the country so much, or the world so much, that we need to do something special this one time.
Ken Feinberg: I don’t know why you say that’s not a good analogy, you’ve given a couple of examples which are fabulous analogies. Sometimes there a benefits that are directed at certain individuals, countries, individuals, states, Etc. But a designed to [inaudible 00:34:48] the benefit of the entire body politic and I think those are some good examples, and 9/11 was an example.
Preet Bharara: So you’ve had other cases, the BP disaster, where circumstances are a little bit different. How is that different, more complicated, or easier than 9/11?
Ken Feinberg: Easier in the sense that it’s private money from international oil cartel, so you’re not using taxpayer money. Very very problematic because of the volume of claims. In the BP oil spill I received in 16 months 1,250,000 claims for oil damage from 50 states and 37 foreign countries. I didn’t know the oil had got to Alaska, or to Boston, or to New York. Well that was very problematic. The sheer magnitude of the catastrophe led me to have to process 1,250,000 claims. But it was private money, it was a private settlement, pushed by the Obama Administration, which demanded an independent administrator asked me to do it. And we got it done, $6.5 billion spent paid out in 16 months.
Preet Bharara: What considerations in your mind are different when it’s public money versus private money?
Ken Feinberg: Well first of all, public money is unprecedented. I mean one of the considerations you’ve got to realize is our political discussion five minutes ago about the Marshall Plan. When you’re using taxpayer money to the benefit of private citizens, right away you’re in a political thicket. Because why those citizens when there are plenty of other innocent victims? With the BP oil spill money there’s no love lost if it’s going to cost BP 20 billion or 30 billion or 40 billion, because it’s BP, and it’s an oil company, and they fouled beaches of the Gulf. But you run into this dilemma nevertheless of determining eligibility when hundreds of thousands of people are asking for money. That is a challenge no question.
Preet Bharara: So you’re now working on another hot-button issue that is much in the news with respect to the Archdiocese of New York, the Archdiocese of New Jersey, the Archdiocese of Philadelphia. Figuring out compensation for victims of sexual abuse. That’s another difficult one.
Ken Feinberg: It is a difficult one.
Preet Bharara: [crosstalk 00:37:16], Ken. How do you think about those issues, and what considerations exist there that may be the same or different?
Ken Feinberg: Well first of all it’s all church money, it’s not publicly funded. This is all private money coming from the bank accounts of the Catholic Church. Secondly, all of the claims are basically time-barred by the statute of limitations. These are abuses that took place decades ago. So in a sense, the money is a gift because unless the various states like New York recently reopened the statute of limitations to allow a reopen for people to sue, if they can sue, or if they want to sue. The money is recognized as very very helpful, and sort of the only monetary avenue available. But the money doesn’t go very far in a swaging the harm inflicted on these abuse victims when they were minors, abused by the church, by priests. And it is very very debilitating, it’s very emotional, it’s tragic.
Preet Bharara: Are you meeting with individual victims in those cases too?
Ken Feinberg: In all of these programs I offer to meet with anybody who wants to meet one-on-one with me. You don’t have to, it’s an option. Many many people, more than half, don’t want to meet with me. They’re embarrassed, they’ve tried to move on. They’ve coped as best they can, just send in the form, send me my money, I have no reason to come and see you. Others want to come and talk. And I’ll meet with them, and that’s the tough part.
Preet Bharara: Do you think you could have a second career now as a counselor?
Ken Feinberg: No.
Preet Bharara: You haven’t gotten that good yet? I mean you passed hundreds and hundreds of experiences talking with people who’ve gone through pain and suffering. What have you learned from that?
Ken Feinberg: Well you do learn some things. You learn from the perspective of the victim how different human nature is. Every victim is different, you know this. Some come to see me angry, frustrated, disappointed, tearful. The reaction of victims in any tragedy is as multifarious and as diverse as human nature itself. The thing I’ve learned, you probably learned it better than me many years ago in your work, is to become a better listener. Become more empathetic. You don’t know it all, you don’t know a thimble frankly and some of these cases. And a recognition I think of ones humility in confronting people who have confronted the horror of tragedy I think, I’d like to think makes you a better person.
Preet Bharara: I’m sure it does. But then going back to how you quantify the loss for purposes of compensation, in some ways this sounds macabre, there’s either death or not. And you gave the example of some other cases basing compensation on how many days someone was in the hospital. In the case of sexual abuse, what are the factors and metrics you use to decide who gets what?
Ken Feinberg: How old was the minor when abused? How often was he abused? What is the nature of the abuse? It’s one thing if for a year the priest rubbed your shoulders, or rubbed your crotch. It’s another thing if we have sodomy, rape, and over how many incidents? Once, 10 times, 200 times, those are all factors.
Preet Bharara: But do you establish a chart for each of those? Again, this sounds a little bit of the speech this way, but do you assign values so that your decisions are uniform?
Ken Feinberg: Yes.
Preet Bharara: Or do you take into account these considerations and then sort of do a ballpark what seems right?
Ken Feinberg: You start sort of a hybrid, you’re right, we start with a matrix. Basically we’ll pay anywhere from $10,000 to maybe $500,000 depending on the nature of the abuse, incident rate, and all of that. But then there are add-ons, minor, drugs, alcohol, location of abuse. There are occasions where the priest would only abuse the child in the church itself, not in the rectory. So we take that into account. But we have a pretty consistent I think line of compensation, opinions, and eligibility opinions. Because I think consistency is important in demonstrating to people the program isn’t biased in any way.
Preet Bharara: Did it feel perverse ever, I feel this way often about the sentencing guidelines and the fact when you’re talking about punishment, different context but parallel, when you’re talking about punishment in the interests that are important, that you just described of uniformity and consistency, we have come up with a numerical system that gives points to how many convictions you have, and gives points in the other direction if you’ve not had convictions. And gives points for the dollar amount of loss, and how involved you were, and whether you were a leader. And it seems perverse to have a numerical chart that tries to get at all these different considerations mathematically, which you have to do as well, given the description of the sort of matrix that you’ve just described. Is that just the way it has to be, and you throw up your hands because there’s no other way to do it? Or do you ever feel this is an odd exercise when we’re talking about young boys who have experienced an incredible amount of mental and physical anguish?
Ken Feinberg: I think [inaudible 00:43:04]. First of all, your criticisms of sentencing guidelines for example, you are reading from Judge Weinstein’s book, and his articles, and his constant criticism of the guidelines on the grounds that it is all points, and numbers, and calculations. And the failure of the criminal justice system to recognize the individual variables of every convicted offender. I know of your work in the southern district, in the sentencing guidelines, there’s a prosecutor. And the difficulties in applying those guidelines and individual cases.
Ken Feinberg: Now in the church, you can make the argument there is a certain degree of uniformity, and certainty, and consistency that violates the individual variables of a case. But I think with my work in the church, it’s less of a problem because of the rather consistent nature of the harm overtime. And you’re comparing apples and apples in a way. You are not looking at the different variables of the victim’s home life and all of that. It’s more a focus on the quality of the harm, the nature of the harm, and the number of incidents. And so it’s easier I think to develop a matrix. Notwithstanding you’re absolutely right that there are other variables that have to be factored in to make sure that it’s not just assembly line justice, but there is consideration given to the uniqueness of every case. So we try and do that within the range.
Preet Bharara: So there was another whole different category of type of matter that you worked on that I’m presuming was less of an emotional effect on all parties, but maybe I’m wrong about that. And that was after the financial crisis you were asked by the treasury secretary to figure out the proper compensation packages for the heads of various companies including Chrysler, Bank of America, AIG, and others. And you have written “Do not underestimate the emotions associated with arguments over pay.” What was that experience like?
Ken Feinberg: Oh, shocking experience. I would have thought that when I sit with a corporate executive and tell that corporate executive because of the crisis, the financial crisis, I’m going to cut your pay 50%. I thought that that official would say something like, “You have a hell of a nerve doing that because now I will have to sell one of my automobiles in the garage. I’ll have to sell my summer home on Long Island, or I’ll have to tell my kids they’ve got to go to public school instead of Phillips [inaudible 00:45:51].”
Ken Feinberg: And I was prepared for that. What I wasn’t prepared for was the corporate official who would look at me and say, “You cut my pay by 50% and you are demeaning myself worth. My compensation is a mirror, a barometer, of my self-worth. Not Community, not my family, not the church, my pay. And when you say you’re cutting my compensation in half, you’re telling me personally I’m only half the person I thought I was.” Well I never prepared myself for that, and it got very very emotional.
Preet Bharara: How did you respond? How did you respond to people?
Ken Feinberg: There’s nothing, I responded in a rather hollow way, which was, “Well that’s what congress says when they passed the law and I’m on a bound to follow the law.” But I realized that it made no sense for me to say, “What do you mean self-worth? what about your family, and your wonderful work in the community, the church that you’re…” I’m not going to get in an argument with these people, that’s the way they feel. But it was very very emotional and very very difficult. And I would have thought loss of life would have been much more emotional, but I was wrong about that.
Preet Bharara: What does that say about their leadership skills do you think and how they run their companies if their self worth is so bound up in the compensation number?
Ken Feinberg: Well I think that their leadership skills are called into question, I’m not sure that they run their companies wrongly. Maybe that it’s considerations like that that make their company so successful. I don’t know, I don’t want any part of it. Nor do you based on your experience in your resume, you don’t want any part of it.
Preet Bharara: Yeah well if my self-worth were determined by composition, I might be doing something differently today.
Ken Feinberg: No I think that’s right, see. And that is frankly a tribute to you, and that’s the way it is. But it stunned me, I’ll tell you that. And after all those years of public service I said to myself, “What?” But so be it.
Preet Bharara: How do you deal with criticism? You get a lot, you’re in a position, as we’ve discussed for many minutes now, where emotions are raw. People think they’re not getting a fair shake, where people are angry, frustrated, grieving. I think you once called yourself a human pinata. How do you deal with that?
Ken Feinberg: You don’t deal with it publicly, I mean I never engage people that criticize me. They lost loved ones, what do you expect? Show some understanding of what they’re going through. “Mr. Feinberg it’s all your fault.” “Well I do hope that this helps in some small way.” “You’re just trying to buy me off.” “Well you have a right now to take the money if you want, I hope you’ll rethink it.” And afterward among staff we sometimes exchange notes about how unfair most of the criticism is, but it goes with the territory. And when the public criticizes me I simply show them a key, like one of my keys and say, “You don’t like the way I’m doing the BP oil spill? Fine, here’s the key. You do it. Do you want to do it?” That shuts them up pretty quickly.
Preet Bharara: What about the plaintiffs lawyers?
Ken Feinberg: Most plaintiff lawyers love these programs. They represent people in what is essentially a workers comp system, and they still get their third contingency fee. Now some of the plaintiff lawyers I engage with who say that this is a threat to the rule of law. And what you do Feinberg without any checks, there’s no committees, there’s no appeals, it’s just your word, your decision it’s unreviewable, that’s not the American way.
Ken Feinberg: And I say to those lawyers, “You’re right, it isn’t the American way. Fortunately, fortunately you don’t have anything to worry about, these programs that Preet and I are talking about today are aberrations, they are unique, and they’re not going to replace the tort system. They’re not going to replace the legal system that you taught in law school.” Most lawyers were taught that what I do is not the right, and I appreciate that, I attended law school. And I understand that you were taught a different way, the adversary system, judge and jury, you choose your lawyer, I’ll choose mine, off we go. That’s the American way, and that’ll stay the American way. These programs are rather interesting to talk about, but I don’t think they’re the way of the future.
Preet Bharara: Ken Feinberg, thank you for making the time. This was a great conversation.
Ken Feinberg: An honor, and a privilege. And I salute you for all you have done for the good of the country. I’m proud to have been allowed to be on the show today.
Preet Bharara: Thank you sir. And don’t try to hide your keys to me, keep the keys.
Ken Feinberg: You’re next, I finally figured out who is replacing me. It’s taken me years to figure this out. There is now a public, I can now publicly say just ask Preet, he’s ready to do it, pro bono.
Preet Bharara: Thanks, Ken.