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Feinberg Warns Over Dangers of Disaster Payout Funds

The relief fund for victims of last year's Gulf oil spill is working efficiently but shouldn't be used as a template for future disasters, Ken Feinberg, administrator of the fund, told CNBC.

Woman lies on the beach as workers clean up tar balls on the Gulf Islands National Seashore, Pensacola Beach, Florida.
AP
Woman lies on the beach as workers clean up tar balls on the Gulf Islands National Seashore, Pensacola Beach, Florida.

In fact, he cautioned that the government should be wary of setting up similar types of funds, which he said should be "very rare" as they only help "a small segment" of the population.

Hurricane Katrina victims in 2005 didn't get a relief fund, nor did those of the Oklahoma City bombing in 1995, he pointed out.

"They're an aberration. They single out people for special compensation," Feinberg said of disaster funds. "When bad things happen to good people every day in this country, I don't think we should make it a habit of repeating these entitlement programs."

The Gulf Coast Oil Spill Relief Fund was set up to assist victims of the BP Deepwater Horizons spill that polluted the Gulf of Mexico a year ago today. It took workers nearly three months to cap the affected well, and the region, which is a hotspot for tourism and fishing, continues to struggle toward normalcy.

Residents have complained that the process has been too slow to get relief in the right hands. The fund has received 850,000 claims and has disbursed about $4 billion of its total $20 billion in allocations, Feinberg said.

Feinberg acknowledged that some of the criticism is legitimate, especially considering the lack of transparency in the process.

"I didn't anticipate quite the amount of criticism by disgruntled victims, who through no fault of the their own have been victimized by the Gulf," he said. "That criticism is what we've got to address going forward."

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