Wall Street’s reaction to asbestos bill indicates companies benefit over victims
June 22, 2005
In April, when Congress took up a bill that would create a national trust fund for compensating hundreds of thousands of victims of asbestos exposure, Public Citizen consumer group, as well as other groups, warned the legislation would alleviate liability for asbestos companies and other firms but the victims would lose.
The bill, S. 852, has been introduced and passed out of the Senate Judiciary Committee, and the rising stock prices of asbestos firms indicate Wall Street agrees that the bill benefits the companies, according to an analysis of Public Citizen. From the time the bill was introduced and passed out of the Senate Judiciary Committee the consumer group’s analysis shows major asbestos firms have already seen an average of 22.8 percent gain in their stock prices.
S. 852 proposes to create a $140 billion fund to compensate workers exposed to asbestos, but many are worried the fund could go bust because it will not collect enough to pay all benefits. Last month, Public Citizen issued a report on the asbestos legislation that showed a small group of companies has spent tens of millions of dollars to successfully lobby for relief from asbestos liability worth tens of billions of dollars.
In 2003 alone, an estimated 10,000 people died of asbestos related diseases. The latency period between exposure to asbestos and the appearance of symptoms can be decades long, and some experts believe the number of asbestos related diseases has not even peaked yet, predicting the number will reach its high in 2018. Under S. 852 the contributions asbestos firms would make to the trust fund would be substantially less than if they had to create their own trust funds to compensate victims.
According to Joan Claybrook, president of Public Citizen, victim compensation depends directly on how much the companies contribute, and the fact that stock prices of asbestos firms have risen with each step in the legislative process of the bill is a clear indicator that the companies are the winners under the legislation. Seven asbestos firms will collectively benefit from an estimated 73.6 percent reduction in their liabilities - down from $18 billion to $4.7 billion - according to the group. W.R. Grace & Co., for example, would see an estimated 86.9 percent fall in liability from $3.2 billion to $418 million, and USG Corp would see an estimated 80.4 percent fall in liability from 4.1 billion to $797 million.
There is a disparity on asbestos related disease projections, but estimates have ranged from 750,000 to 2.6 million future claims of asbestos related illness and death. Under the legislation, Public Citizen’s report found corporate interests will be protected, but asbestos victims will lose. For more information on asbestos related illnesses and death, please contact us to confer with an attorney.
