BP to set up $20b fund, could pay more
BP Chairman Carl-Henric Svanberg, right, and BP Chief Executive Tony Hayward arrive at the White House for a meeting with U.S. President Barack Obama in Washington, D.C.
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Kai Ryssdal:It's the 16 of June, and by my calender, that makes it day 58 of the BP oil leak down in the Gulf of Mexico. As I mentioned, the president got the big thing he wanted out of the meeting he had with BP executives today. The company has agreed to set up that $20 billion escrow fund to handle claims against the company.
Our Washington bureau chief John Dimsdale has more on the day's oil events.
John Dimsdale: The White House said attorney Kenneth Feinberg -- already well-known for administering the 9/11 victims fund -- would manage the $20 billion.
Outside the White House after the meeting, the chairman of BP's board, Carl Svanberg, said his company will live up to its legitimate responsibilities.
Carl Svanberg: We will look after the people affected, and we will repair the damage to this region.
President Obama stressed that BP's liability doesn't end at $20 billion. Mark Cohen at Resources for the Future says if BP's liabilities are similar to Exxon's payout for the Exxon Valdez tanker spill in 1989, BP could be on the hook for $40 to $60 billion. Although, Cohen says there's still lots of uncertainty.
Mark Cohen: We barely know what the size of the spill is, let alone the damage to the ecosystem. And a lot of that won't happen for many years.
To meet its obligations, BP will suspend dividend payments to stockholders this year. Oil industry analyst Peter Beutel at Cameron Hanover says that could have long-term implications for the company.
Peter Beutel: There will be a whole class of investor, those people who invest for income -- particularly people who have retired, or for certain pension plans -- that no longer have their main reason for being invested in this company.
The dividend suspension won't be welcome news in Britain, where virtually every leading pension fund holds BP stock.
In Washington, I'm John Dimsdale for Marketplace.