Key Dem says payouts to spill victims comes before BP's stockholders

BP's payment of damages to victims of the Gulf of Mexico oil spill is a more important priority than the company's profitability, a top Democrat said Monday.

Rep. Edward Markey (D-Mass.), a leading House Democrat on energy and environmental issues, expressed confidence in BP's ability to pay damages for the Gulf of Mexico oil spill, but said that its payments to victims of the spill were more important than the oil company's profitability. 

The Democratic lawmaker said during an appearance on MSNBC that there should be a "hierarchy" for the company in terms of its priorities, with payouts to victims of the spill first, and "shareholders and the bondholders down below them."

"It's their company, they invested in it," Markey later said of the company's shareholders. "And unfortunately they did it in good times and bad times as well."

President Barack Obama is expected to announce a plan Tuesday evening to force BP to establish a fund with an independent treasurer to pay out damages to victims of the oil spill, which has severely hurt fishing, tourism and other industries in Gulf states. While the president hasn't put a number on the size of the fund, which will be held in escrow, Senate Democrats wrote BP CEO Tony Hayward to ask for $20 billion for the account.

Some financial analysts have wondered whether or not the pressure on BP's stock price, combined with its growing obligations to pay out damages under pressure from the government, could mean bankruptcy for the oil giant. Markey expressed confidence that BP had the money to meet its obligations to victims.

"I think that BP has a very strong revenue flow," he said. "It's not like AIG or Lehman Brothers, where all they had as assets were the financial papers."

Markey pointed to the company's large cash reserves and oil assets internationally, though BP has already spent $1.6 billion on containment and cleanup efforts related to the spill. 

The Democratic congressman serves atop several key subcommittees on energy and environmental issues. He said that Obama should emphasize the extent to which the company is on the hook for damages in what will be Obama's first Oval Office address on Tuesday night.

"I think the American people will want to hear that 'BP' stands for 'bills paid,' and there will be a compensation fund for the victims," he said.

Cross-posted from the Briefing Room.