Discuss as:

Obama says BP's $20b escrow is not a cap

Emerging from a marathon meeting with BP officials, President Obama today announced that the embattled oil company had agreed to establish a $20 billion escrow account to cover damage claims resulting from the worst environmental disaster in the nation's history.

He also said that $20 billion is not a cap, and added that BP would create at $100 million fund to compensate unemployed oil workers affected by the government's six-month moratorium on exploratory drilling in deep water.

"The people of the Gulf have my commitment that BP will meet it obligations to them," Obama said. "BP has publicly pledged to make good on the claims that it owes to the people in the Gulf, so the agreement we reached sets up a financial and legal framework to do it."

Obama called today's meeting -- his first with BP officials -- "constructive" and said the current $75 million cap on oil companies' liability in the case of oil spills under federal law would "obviously be insufficient" and that therefore the escrow account would provide "substantial assurance" that claims would be honored. BP has agreed to contribute $5 billion a year over a four-year period to the account, including this year, according to a White House fact sheet.

Ken Feinberg, who ran the 9/11 victim's fund, will administer the escrow account independently, and a three-person board will handle damage claims that are turned down, the president said.

In addition, Obama stated that the escrow account did not supersede either individuals' rights or states' rights to present claims in court, and said BP would continue to be liable for the environmental disaster it has caused.

The remarks came after a meeting between administration officials and BP executives that lasted several hours. Among those in attendance at the Roosevelt Room discussion were BP CEO Tony Hayward, BP Chairman Carl-Henric Svanberg, BP General Counsel Rupert Bondy, BP Managing Director Robert Dudley, White House adviser Valerie Jarrett, Labor Secretary Hilda Solis, Attorney General Eric Holder, and Homeland Security Secretary Janet Napolitano.

After the meeting, BP's chairman, Carl-Henric Svanberg, told reporters that the company and the administration were "fully aligned," he apologized to the American people, and said the company would not pay out dividends for the rest of the year.

Svanberg also assured the press that the BP cares about "the small people" like the shrimpers, fisherman and small business owners of the Gulf Coast.