New York City Mayor Michael Bloomberg recently recruited fellow billionaire Warren Buffett. He asked him to take over a taxpayer fund that was set up to pay claims based on the toxic Ground Zero cleanup, which we recently learned from the New York Post.
The surprising plan currently under review would give Berkshire Hathaway, Warren Buffett’s holding company; a total of $270 million in federal funds currently managed by World Trade Center Captive Insurance Co. Buffett would then convert this cash into a commercial insurance policy worth $600 million.
Berkshire Hathaway would absorb the risk of new 9/11 health claims and litigation, but it really isn’t clear how much profit Buffett stands to make because of this deal. The city of New York is not going to receive any dividends, we learned from an official.
Berkshire Hathaway, currently headed up by the 83 year old CEO and chairman Warren Buffett – who is currently ranked second richest person in the United States after Bill Gates, according to Forbes. The conglomerate based out of Omaha Nebraska, which also owns Geico, Fruit of the Loom and Dairy Queen as well as dozens of other companies also reported a 29% increase in third-quarter earnings last week and company revenues grew to nearly $46.5 billion.
The WTC Captive gave a statement to the post on Friday and mentioned that the private insurer “what assume all liabilities” of the entity. It was formed in New York City in 2004 and received $1 billion from Congress to cover the 9/11 related lawsuits brought up against the city. After many years of litigation, the entity actually paid over $668 million to settle over 10,000 Ground Zero claims from recovery and rescue workers.
The statement, that didn’t actually name Berkshire Hathaway, mentioned that the transaction would provide Ground Zero contractors and the city of New York with “$330 million more insurance for 9/11 claims.” This plan would also make “more money available to respond to claims” once the federal September 11th Victim Compensation Fund closes down in 2016, according to the statement. The VCF was reopened by Congress in October 2011 and given $2.7 billion in order to pay off 9/11 responders, residents of lower Manhattan and other individuals disabled by smoke and toxic dust during the World Trade Center attacks. 50 types of cancer and more have been discovered.
It is expected by the experts that another large wave of 9/11 workers will end up with cancer that may take as much is 20 years to develop. WTC Captive said previously that it would stay in business until the year 2029 in order to defend the city against these lawsuits. With this new proposal, WTC Captive would “engage in an orderly wind down of operations.”
The New York Post obtained records which showed the fund had $333.5 million in the bank as of September 30, 2013. It spends millions of dollars each year on staff and lawyers, and Christine LaSala, CEO, makes $234,500 a year.
The statement said that the commercial insurance policy “would not terminate unless and until the entire limit of insurance is paid.”
A Law Department spokeswoman from New York City said, “This will provide ongoing professional management of the fund and will more than double the total coverage available for potential future settlements.”
The proposed deal, which needs FEMA and Gov. Cuomo approval, was a big surprise for members of Congress and 9/11 health advocates.
“I have to look into this. It raises a lot of questions,” said Rep. Jerrold Nadler. “I don’t know how this will affect potential claimants. Will it make it harder or easier for them to collect?”
An advocate for 9/11 responders, John Feal, did not think too highly of these negotiations being held secretly during the final days of the Bloomberg administration.
“It just seems that two pompous billionaires are making a deal and not letting us know,” said Feal. “I think our elected officials need to know if this is a good thing or a bad thing for the 9/11 community.”
A knowledgeable source believes that Berkshire Hathaway is going to make a profit from this deal without a doubt.
“They’re doubling the insurance protection, and how is that economically possible? Are they making a bet that they won’t have to pay it off?” the source wondered.