President Obama just formally announced that energy giant BP will finance a $20 billion fund to compensate people whose livelihoods have been damaged by the devastating oil spill in the Gulf of Mexico.

Obama also said BP has voluntarily agreed to set aside $100 million to help oil workers who have been displaced since the Deepwater Horizon rig exploded on April 20 and killed 11 people.

Kenneth Feinberg, a lawyer currently overseeing executive pay issues for the White House, will be in charge of the compensation fund. A three-person panel will mediate any disputes. Feinberg also oversaw payments to 9/11 victims for the federal government.

"This is about accountability and at the end of the day that's what every American wants and expects," Obama said in the State Dining Room.

Obama said BP is committed to ensuring that economic claims will be processed and paid out in a timely manner. According to a White House fact sheet, BP will contribute $5 billion a year for four years into an escrow account. BP is providing assurance that their financial obligations will be met by setting aside $20 billion in U.S. assets.

After Obama's announcement, BP chairman Carl-Henric Svanberg apologized to the American people. He said the company's board has decided to stop paying out dividends this year.

"I do thank you for your patience that you have in this difficult time," said Svanberg, talking to reporters gathered outside the White House. "Through our actions and our commitment we hope over the long term that we will regain the trust you have in us."

Svanberg also said: "Words are not enough. We will be judged by our actions."

The compensation fund and money for oil workers were announced after a White House meeting between administration officials and BP executives, including Svanberg and CEO Tony Hayward. The "constructive" meeting, as Obama described it, ran longer than the White House expected and pushed back Obama's remarks by more than two hours.

"Today was a good start," Obama said. "This should provide some assurance to small business owners that BP is going to meet its responsibilities."

Obama said he spoke privately with Svanberg about keeping the people of the Gulf in mind as the company continues to deal with fallout from the spill. "I emphasized to him that for the families I met with down in the Gulf...this is not just about dollars and cents. A lot of these folks don't have a cushion."

During his Oval Office address last night, Obama vowed to hold BP accountable for what he described as their "recklessness" in the Gulf.

"We will fight this spill with everything we've got for as long as it takes," Obama said last night.

A panel of federal scientists now estimates the oil spill is leaking between 1.47 million gallons and 2.52 million gallons a day.

(Posted by Catalina Camia)