BP Is No Citigroup in Regard to Messes

BP and the banks both made a mess, but the government will be tougher on the oil companies.
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NEW YORK (

TheStreet

) -- The political debate regarding the oily mess left behind by

BP

(BP) - Get Report

has much in common with the one surrounding financial companies like

Citigroup

(C) - Get Report

,

Bank of America

(BAC) - Get Report

and

AIG

(AIG) - Get Report

, but there are some key differences worth keeping in mind.

Oil leaks into the Gulf of Mexico

The parallels are straightforward enough. BP and

Transocean

(RIG) - Get Report

, whose rig BP was using when it caused the massive oil spill in the Gulf of Mexico, left a massive pile of wreckage behind in their pursuit of profits. Tempting though it is for the government to push the offending companies out of the way and clean up the mess, there is lots of evidence in both cases that the companies and people with the most resources to fix the problem are the same ones who caused it.

>>Oil Spill in Pictures: Gulf of Mexico Impact

That was the message delivered by Coast Guard Admiral Thad Allen,

quoted on the front page of The Wall Street Journal

Tuesday.

Allen told reporters the government lacks the tools and expertise to clean up the spill, the newspaper reported.

"To push BP out of the way, it would raise a question: Replace them with what?" Allen was quoted as saying.

Presidents Obama and Bush found themselves in a similar situation when it came to bailing out big financial companies like Citigroup and Bank of America. Opposition to a bailout united both conservatives and liberals.

The conservatives hated to see the government meddling in private industry, and felt failure should have real consequences for executives and shareholders. Liberals hated to see rich people getting help from the government at the time when poor people were losing homes and jobs in huge numbers.

Still, banks were needed to make loans and keep the wheels of commerce rolling. Otherwise, it would mean more jobs and homes would be lost.

A big difference, though, is that BP and Transocean are highly profitable companies. They are foreign-owned and, vital though they may be to the functioning of the U.S. economy, their role pales in importance to that of the big banks. All of these things mean the U.S. government can afford to be harsher in dealing with them than they have been with the banks.

Citigroup Sell Citigroup!: Against the Grain

How harsh the government has been in dealing with banks is a matter of debate, and some of the harshest stuff,

like measures in the recent reform bill that passed through the Senate that would require banks to spin off their derivatives businesses

, may never become law. Still, however tough you think Washington, D.C., has been on banks, expect tougher measures to be aimed at BP, Transocean, and the rest of the oil industry in the weeks, months and perhaps years to come.

Citigroup Sell Citigroup!: Against the Grain

--

Written by Dan Freed in New York

.