Did Goldman sabotage BP’s blowout preventer?

June 7, 2010

Did Goldman Sachs sabotage the blowout preventer on BP’s doomed Deepwater Horizon well? Of course it didn’t. But the British oil giant’s troubles in the Gulf of Mexico have certainly handed Goldman  a public relations reprieve. Similarly, the Wall Street firm’s travails following accusations of fraud took Toyota Motor’s recall woes off the front pages.

There’s no obvious link between a bank, an oil driller and a carmaker. But the reputational struggles of these three global giants suggest one lesson that won’t be lost on shrewd corporations: the court of public opinion — led by the political class and including the press — only appears capable of coping with one villain at a time.

That, at least, is the impression from a cursory news search using Factiva. In the three months leading to March 19, Toyota was cited in three times as many articles mentioning the word “scandal” as Goldman. In the month to May 19 the quantum shifted six to one in favor of Goldman. BP has now eclipsed them both.

Now this may just be a case of regulators and politicians — and perhaps reporters — failing to multitask. Even the most energized lawmaker can only hold one hearing at a time. But the impression left raises questions about the intent and seriousness of inquiry.

The objective in going after corporations should not be to score political points or even put a few executives behind bars. The broader public interest is better served by determining where the government’s regulatory apparatus — whether designed to protect investors, car buyers or brown pelicans — fell short and how to improve it.

After all, however socially responsible a corporation may be or claim to be, it is answerable to its stockholders. That’s no excuse to cut corners and undershoot the standards required by regulation and simple professionalism. But a primary concern is always going to be profits.

That’s not villainy. It’s just the way free markets work. By all means, rake BP, Toyota and Goldman over the coals when they have fallen short. But it’s also important to ask why government oversight failed so spectacularly. Attempts to answer that question shouldn’t be put on hold just because another politically opportunistic scandal comes along.

Comments

An accident like this is not due to “just the way the markets work”. That is an absurd way to look at the outcome when corrupt regulators and politicians fail to do what they were elected to do, govern in the best interest of the citizens.

I am in favor of offshore drilling, and until one stops uses oil there is a implied consent that you accept the risks of providing energy so we can live the good lives we do.

The problem in this case was that Governor Jindal was too busy turning down money to pay unemployed people a little while longer to make sure that the assets of his state were being managed properly and safely.

Instead he put campaign donations over proper engineering and procedures, when working for NASA we had clear and practiced procedures that lower the chances of accidents to the absolute minimum practical level.

It was clear from published transcripts that there was nothing of the sort in place, people didn’t know who to ask and communications were not maintained in real time, all procedures that would have limited or eliminated this accident.

Your statement that profits always comes first is regressive and disregards human lives as if they are a bargaining chip, they are in some cases, as the brave folks in Afghanistan know but equating the pursuit of liberty and the reduction of suffering with oil company profits is something that will not be acceptable to most of us.

Posted by jstaf | Report as abusive
 

Interesting article..re: the Gulf “blowout” (or any other current events) who had most to gain ? Goldman Sachs apparently did “short” the gulf in advance of the blowout, other oil companies and banksters take aim at each other all the time, politicians have stakes in making each other look bad..the true religion in the “developed” countries is money..it just IS, stating it without judgement..so, who had most to gain ?..huh ?

Posted by gramps | Report as abusive
 

The global companies that create risks of global financial meltdowns and catastrophic ecological disasters are a threat to society.

Clearly, companies like BP and Goldman Sachs are “too big to fail,” “too big to manage,” “too big to regulate,” and too big to keep around…”

Please copy and paste this message and send it to everyone you know with my blessing.

Thank you for the opportunity to comment…

Posted by mckibbinusa | Report as abusive
 

Government regulation is unfortunately the only blowout prevention that can stop runamok corporations. Congress needs to act to limit the rights of corporations to vote, as the Supreme Court is only increasing the power of corporations.

Posted by sk8sonh2o | Report as abusive
 

For: Rob Cox at Reuters:
Read it and weep/watch it and you will do likewise.

http://www.glennbeck.com/content/article s/article/198/40154/

CCX (Carbon Credit Exchange) is corrupted by greedy politicians. Billions earned by these politicians if Cap and Trade passes.
Principal investors: Goldman Sachs, Seiu, AFL-CIO, Franklin Raines, Al Gore, Obama (Joyce foundation)
GE.

Posted by Flash287 | Report as abusive
 

The BP spill should never have happened. Why are they drilling out so far? Could it be that environmental regulations pushed them out where drilling is more cosly and riskier?

I say drill on the mainland and drill in shallower waters.
No matter how you hide from the realities. Oil based fuel remains the only economical option. There is nothing that can replace it in the foreseeable future.

Making it very expensive will only drag down the quality of life around the world.

Regulations could not have prevented the accident.

Posted by Flash287 | Report as abusive
 

I have, for the past few weeks, tried to urge people in government and the media to hire our own super-tankers and surround the well at a safe distance and pump surface oil onboard to be processed at facilities onshore. New Orleans is a deep water port.
The oil spill IS NOT BP’s PROBLEM. It is however clearly THEIR FAULT. The problem is now OURS to deal with.
The ex-president of Shell Oil suggested this weeks ago on CNN but was apparently ignored. The Saudis used super tankers and retrieved 80% of their oil spill. They were also smart enough to know that the use of dispersants would render the oil unretrievable.
The myriad of US agencies involved in this spill are not proceeding in a unified direction…….they are just posturing while dolphins are washing up on shore. The Coast Guard can coordinate the super tanker operations instead of counting life jackets on barges employed to block oil from the sensitive Louisiana marshes. That Allen should have a talk with his over zealous personnel as to what their priorities should be. Get the oil off the water now or should we wait for a tropical storm in the Gulf, Sir?

Posted by PKaplan131 | Report as abusive
 

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