Thursday, June 17, 2010

BP to Set Up $20 Billion Cleanup Fund


Stocks ended the day basically flat after BP (BP) agreed to put $20 billion into an escrow account to pay claims related to the Gulf of Mexico oil spill.

The commitment came with a BP decision to suspend its dividend for the rest of 2010, saving about $5 billion. BP shares rallied on the news and were up 1.4% to $31.85 in New York.

The announcement came after President Barack Obama met with BP Chairman Carl-Henric Svanberg and CEO Tony Hayward at the White House today to discuss the spill.

After the meeting with the president, Svanberg apologized "to the American people" for the disaster and said that BP would "look after the people affected, and we will repair the damage to this region and the economy."

BP's cleanup fund will be independently run by Ken Feinberg, the mediator who oversaw the Sept. 11, 2001, victims' compensation fund, news reports said. The $20 billion does not represent a cap for BP. The company and the administration were negotiating final terms.

BP also agreed to set aside $100 million to compensate oil field workers who have been idled by the moratorium on deepwater drilling.

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