BP Execs Agree to $20B Compensation Fund for Spill Victims, Chairman Apologizes

Wednesday: President Obama and Vice President Biden meet with BP executives in the Roosevelt Room of the White House to discuss the BP oil spill in the Gulf of Mexico. Pictured, from left, are BP CEO Tony Hayward, BP Chairman Carl-Henric Svanberg, BP General Counsel Rupert Bondy, BP Managing Director Robert Dudley, Senior Advisor Valerie Jarrett, Labor Secretary Hilda Solis, Attorney General Eric Holder, and Homeland Security Secretary Janet Napolitano. (Official White House Photo by Pete Souza) (This official White House photograph is being made available only for publication by news organizations and/or for personal use)

President Obama announced Wednesday that BP will set aside $20 billion for an escrow fund to compensate victims of the Gulf of Mexico oil spill, as the oil firm's chairman publicly apologized for the disaster and said the company will not pay out any more dividends this year.

Obama and BP Chairman Carl-Henric Svanberg each spoke to the press separately following the president's first meeting with top BP executives since the April 20 rig explosion that triggered the massive leak.

"I would like to take this opportunity to apologize to the American people on behalf of all the employees in BP," Svanberg said, after announcing that the firm would halt dividend payments.

He said BP will live up to all "legitimate responsibilities" and that the escrow account should send the message to Americans that "we mean what we say."

The president assured the public that the $20 billion amount does not represent a "cap" on damages that BP may be liable for, but noted that it was substantially larger than the $75 million amount the firm is liable for under federal law. Obama said the account offers "substantial assurance" that claims will be honored.

"BP's liabilities for this spill are significant and they acknowledge that fact," Obama said. "We will continue to hold BP and all other responsible parties accountable. And I'm absolutely confident BP will be able to meet its obligations to the Gulf Coast and to the American people."

Obama also said the company had agreed to set up a separate $100 million fund to compensate oil rig workers laid off as a result of his six-month moratorium on deepwater drilling.

The deal with the White House arranges for the company responsible for the largest manmade environmental disaster in U.S. history to set aside the money in a fund to be administered by lawyer Kenneth Feinberg.

Feinberg oversaw payments to families of victims of the Sept. 11, 2001, terrorist attacks and is currently President Obama's "pay czar," setting salary limits for companies getting the most aid from a $700 billion government bailout fund.

The announcement follows an Oval Office address to the nation Tuesday night in which the president said he was meeting with BP executives to inform them that they are to "set aside whatever resources are required to compensate the workers and business owners who have been harmed as a result of his company's recklessness."

Obama said the fund will not be controlled by BP but by an "independent, third party."

The meeting with Svanberg, CEO Tony Hayward and other BP executives included several administration officials -- Homeland Secretary Secretary Janet Napolitano, Interior Secretary Ken Salazar, Energy Secretary Steven Chu, Commerce Secretary Gary Locke, Labor Secretary Hilda Solis, Attorney General Holder, Vice President Joe Biden, Chief of Staff Rahm Emanuel and senior adviser Valerie Jarrett,

It was Obama's first meeting with BP officials since the spill. While Hayward has served as the voice of the company, the White House has been emphasizing the role of the company's chairman, Svanberg, instead.

The BP decision to cancel dividend payments means investors will lose out on the $2.6 billion payment scheduled for June 21 and even more money over the rest of the year.

For the president, the tough diplomacy with a few officials behind closed doors is a bookend to his attempt to reach millions at once.

Using a delivery in which even the harshest words were uttered in subdued tones, Obama did not offer much in the way of new ideas or details in his speech to the nation Tuesday night. Instead, he mainly recapped the government's efforts, insisted once again that BP will be held to account and tried to tap the resilience of a nation in promising that "something better awaits."

Republicans criticized him for using the speech to push energy legislation but also chided him on Wednesday for taking 58 days to hold a high-level meeting with BP executives. The Republican National Committee released a web video titled, "What Took So Long?" drawing attention to all the fundraisers, golf outings and meetings with the celebrities the president has participated in since the April 20 explosion.

The escrow account was something many lawmakers had called for. Senate Majority Leader Harry Reid and 53 other Democratic senators had requested BP set up a $20 billion account, but in a letter issued Monday said that does not limit the firm from future expenses.

After the administration reached a deal with BP for the escrow account, a senior treasury official told Fox News that Feinberg would start administering the account immediately, though he would continue to oversee bailed-out banks. The official said Feinberg would transition away from those duties over the summer.

The Associated Press contributed to this report.