Obama met with BP Chairman Carl-Henric Svanberg at the White House to discuss the disaster that began April 20 when the Transocean oil rig operated by BP exploded, killing 11. The rig sank two days later, spewing as much as 60,000 barrels of oil a day ever since.
Obama said he will not be satisfied until 100 percent of the leaking oil is being captured and that already spilled crude is cleaned up.
"So what this is about is accountability. At the end of the day that's what every American wants and expects," the president said.
Obama said the $20 billion will be placed in an escrow account to be administered by Ken Feinberg, who headed up the Toxic Asset Relief Program and also administrated the compensation process in the wake of the Sept. 11, 2001, terrorist attacks. In addition, $100 million more was to be set aside to aid oil workers idled by the six-month moratorium on offshore oil operations.
Carol Browner, assistant to the president for energy and climate change, told reporters at a White House briefing the agreement was "driven" by the White House and she doubted BP would have taken such action on its own.
She said the $20 billion figure is neither a "floor" nor a "ceiling."
White House spokesman Robert Gibbs said the setting of a figure "does not in any way limit or cap" the economic or natural resource damages BP may be responsible for.
Obama said the fund is a starting point and will not prevent individuals or states from seeking additional compensation.
"The people of the Gulf have my commitment that BP will meet its obligations to them. And BP has publicly pledged to make good on the claims that it owes to the people in the Gulf," Obama said in a statement following the meeting.
"And so the agreement we've reached sets up a financial and legal framework to do it. … And BP will also continue to be liable for the environmental disaster it has caused. And we're going to continue to work to make sure that they address it."
Obama said in a private conversation with Svanberg he emphasized the impact the spill has had on people living in the region -- especially since they were finally recovering from Hurricanes Katrina and Rita in 2005 and from "the worst economy since the Great Depression."
"This was the season they were going to bounce back," he said, adding that the spill came at the worst possible time, when coastal residents make their income for the year "in the three or four months during which folks can take their boats out, people are coming down for tourism."
"And so I emphasized to the chairman that when he's talking to shareholders, when he is in meetings in his boardroom, to keep in mind those individuals; that they are desperate; that some of them, if they don't get relief quickly, may lose businesses that have been in their families for two or three generations."
In Tuesday's national address from the Oval Office, Obama criticized the London-based company for its "recklessness" and vowed "BP will pay." He also said BP would be removed from directly handling claims filed by individuals and businesses.
Obama spent Monday and Tuesday touring the Gulf Coast.
In his speech, Obama said efforts to contain the leak "should capture up to 90 percent of the oil leaking out of the well" within the coming weeks. Ending the leak should occur later in the summer, when a relief well being drilled by BP should be completed, he said.
BP said in a statement Tuesday: "We share the president's goal of shutting off the well as quickly as possible, cleaning up the oil and mitigating the impact on the people and environment of the Gulf Coast."
BP announced Tuesday it sped up commercial large-loss claims and approved checks totaling more than $16 million to businesses that have filed claims of at least $5,000.