How did Americans lose faith in our institutions? Just look at the Camp Fire aftermath | Opinion
The five-year anniversary of the Camp Fire that devastated Paradise has come and gone. Pacific Gas and Electric has moved on, enjoying record rate increases. Yet too many of the victims of the fire remain as financially devastated as the Sierra landscape.
PG&E so-called settlement with the victims as it came out of bankruptcy has proven to enrich the company while providing a handful of pennies on the dollars for assets lost. And those pennies are being taxed by the federal government because a divided Congress is incapable of providing relief through a tax exemption.
Opinion
Seeking compensation for their losses, fire victims filed a class action suit against PG&E in 2019. At the time, PG&E had assets worth billions more than its debts ($51.7 billion in total debts and $71.4 billion in assets) but the company filed a strategic bankruptcy. This resulted in a drawn-out process that settled the fire victims’ class action against it for $13.5 billion, but tied victim compensation to PG&E’s stock price.
The structure of the class action settlement was foreseeably flawed. Tying victim compensation to the stock price of a corporate felon guilty of decades of neglect did not promise the best outcome. But victims of that neglect, desperate to rebuild their lives and largely uninformed of the settlement’s flaws, grabbed at the promise of being made whole.
(Guess what wasn’t tied to PG&E stock price? The $11 billion quickly paid to insurance companies as compensation for the claims they had paid, and to Wall Street hedge funds that bought insurance claims at a discount and profited in the billions.)
The Camp Fire occurred in late 2018. In late 2023, we learned that claimants would receive, at best, 75% of the restitution they deserve for the damage PG&E caused. The insurers and hedge funds saw 100% of theirs.
California quickly exempted the fire settlement monies from state taxes. A bill to exempt the settlement from federal taxes languished through two sessions of Congress and died last year, never reaching the floor. Claimants will now owe federal taxes on money they received — and money they did not: the 25%-30% paid off-the-top in attorneys’ fees.
PG&E had a whole financial system designed to shield it from the true legal and financial consequences of its actions. The people who lost their homes and their livelihoods did not have the big money lawyers and lobbyists to game the system, stuff campaign coffers and promise to keep the cash rolling in, so their issues fell through the cracks like sand.
If you ever wondered how Americans lost faith in American institutions, look at the aftermath of the Camp Fire. A system that corporate interests designed worked as intended to protect the perpetrators of manslaughter from any but minimum accountability. Those forces conspired to protect the interests of power and money and betray the victims of corporate greed and negligence through years-long delays, sawed-off compensation and Kafka-esque tax burdens.
In a letter announcing the shortfall in compensation to fire victims, the head of the trust that oversaw the sales stated, “It follows that the $14.25 billion we monetized was never going to be enough to cover the $19 billion in losses proven by fire victims. That unfortunately is what bankruptcy is.”
Nobody told me that the deal to recover the losses of their homes and possessions based on stock “was never going to be enough” to cover their losses. I was lied to — by omission, at the very least — and I remain betrayed by PG&E’s criminal negligence and its sweet-deal settlement scheme at my expense.
Leonce Gaiter is a writer and decades-long resident of Paradise. His novels include “I Dreamt I Was in Heaven - The Rampage of the Rufus Buck Gang” and “Bourbon Street.”
