Obama, BP Agree to $20 Billion Compensation Fund

Posted June 16, 2010 at 12:14pm

Updated: 4:13 p.m.

President Barack Obama emerged from a Wednesday meeting at the White House with BP executives with praise for their plan to create a $20 billion fund to pay out claims for damages resulting from the Gulf oil spill. But the president also vowed to keep the company’s feet to the fire until it plugs the busted pipeline that has been gushing oil into Gulf waters since April 20.

Obama called the nearly four-hour meeting “constructive” and said he raised two issues with the executives: the containment of oil still pouring into the Gulf, which he said will be 90 percent captured in the coming weeks, and the issue of claims to those affected by the disaster. The president also said the $20 billion amount was not a cap.

“As I’ve traveled across the Gulf Coast, I’ve heard growing frustration over the pace at which claims have been paid. I’ve also heard concerns about whether BP will make resources available to cover legitimate claims resulting from this disaster,” he said.

The president said that is why he is pleased that BP has agreed to pay $20 billion into an escrow fund to compensate the individuals and small businesses affected by the spill. The independent fund will be administered by Kenneth Feinberg, who served as special master of the 9/11 victim compensation fund. Obama also noted that BP voluntarily agreed to set up a $100 million fund to compensate unemployed oil rig workers affected by the closure of rigs. BP has also said it would suspend dividend payments to shareholders for the rest of the year.

News of BP’s willingness to create the multibillion-dollar fund comes a day after Obama gave a national address on the crisis from the Oval Office and pledged to do whatever is necessary to prevent future disasters.

“I’m absolutely confident BP will be able to meet its obligations to the Gulf Coast and to the American people. BP is a strong and viable company, and it is in all our interests that it remains so. This is about accountability,” Obama said.

BP executives in the meeting, which went on for two hours longer than scheduled, included Chairman Carl-Henric Svanberg, CEO Tony Hayward and BP America CEO Lamar McKay. Administration officials in the meeting included Vice President Joseph Biden, National Incident Commander Adm. Thad Allen, Carol Browner of the Office of Energy and Climate, and economic adviser Larry Summers.

After the meeting, Browner characterized the $20 billion fund as “a White House-driven agreement.” Asked if BP was prepared to create such a fund on its own, Browner simply said, “No.”