Opinion

Felix Salmon

BP: Still not as evil as Goldman Sachs

By Felix Salmon
June 11, 2010

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I love this chart from BrandIndex, showing responses to the question “If you’ve heard anything about the brand in the last two weeks, was it positive or negative?”.

To get a score of -40, where Goldman Sachs seems to have fallen to, you’d need 70 people saying they were hearing negative stuff about the bank for every 30 saying they’d heard something positive. BP’s not there yet: I do wonder who’s hearing positive things about them.

But it’s interesting that BP was cruising along happily in positive territory until the spill, while Goldman has been negative for all of the past year. And both have deteriorated significantly in the past couple of months. Chances are there will be some kind of reversion to mean in the future in both cases, but it seems that BP has more upside than Goldman, whose public reputation is likely to stay in tatters for the foreseeable future.

Comments
13 comments so far | RSS Comments RSS

Its surprising that BP had such a high score before the Oil Spill.There is little public discussion about the “evil” acts done by companies like Shell(Africa),Exxon(Valdez oil Spill) etc. etc. It takes a big disaster to bring the all the “black” acts into the limelight.http://Greenworldinvestor.com

Posted by AGreenInvestor | Report as abusive
 

Regarding Goldman Sachs and BP – I doubt either firm is happy now…

Posted by mckibbinusa | Report as abusive
 

BP and GS – hardly the same, are they? One’s an out-of-control set of oily bastards unleashing toxic waste everywhere they’re not expressly prevented from doing so by law, and the other’s BP.

Posted by HBC | Report as abusive
 

My my. It is really quite amazing how Americans can be so easily manipulated. Mr. Obama must be laughing, it’s like taking candy from a baby. Just pick a convenient target, demonize it and go on the attack. Forget about facts or any other such nuisances. Toyota, the oil companies, Wall Street, BP, the big banks…you name it, if there are any possible votes in it, Obama will attack it, playing the populist politician to the hilt. And the lapdog media and supine voters love it. How pathetic.

Posted by Gotthardbahn | Report as abusive
 

@Goth – I think you got off the trolley early. This is Earth.

@HBC – Nicely put and thanks for the chuckle.

Posted by SGinOR | Report as abusive
 

Goldman stock keeps oscillating down. There is just no good news coming for them. Their desperate maneuver to become a bank holding company in 2008 may have saved them then, but now the new finregs restrictions on banks trading will require them to become more pedestrian. And how do you justify paying huge bonuses on bank fees? Seriously, think of one good thing that could possibly happen to boost GS stock.

BP, on the other hand, just might get that well capped, spend billions on cleanup, pay its fines, and come out on the other end of chapter 11. Remember, at least BP put gas in our cars, they actually did something for us. Which you cannot say about GS’s proprietary trading practices.

Posted by randymiller | Report as abusive
 

HBC you make me spew my tea! Thanks for the laugh

Goth, thanks for reminding me that some redneck Obama haters can spell… well one.

Randy, interesting comments, but seeing pictures of cleaners placing paper towels on oil kinda makes one wonder about how the cleanup is going behind closed doors.

Posted by hsvkitty | Report as abusive
 

The evidence available so far is that some decision maker on the Deepwater Horizon decided to use water instead of driller’s mud before cementing the well cap. Every corporation has some clown who thinks he is making himself look good by cutting corners on safety to save some money or time. The question to ask about BP is how those clowns are treated in their corporate culture. If the Deepwater Horizon mess was just one incident in BP’s history, we might eventually forgive them, but the Baker commission report on the Texas City explosion was very damning of BP’s corporate culture. Over and over, BP chose to cut corners on safety to save money, and at the same time posting huge profits. The three little pigs memo on Texas City reveals that given the choice between best practice, “sort of OK” practice, and absolute lowest cost practice, BP would take the middle option. Cover their ass, but not really do the best thing.

After the Texas City explosion investigations, BP did promote the director of their safest refinery to be in charge of process safety at BP. Whether he has been effective or not is unknown.

It really appears that BP under Hayward is more about the appearance than substance. Spending $50 million on a PR campaign to improve their image after Deepwater Horizon, instead of spending every last dollar to reduce the impact of this mess… might be the most compelling evidence that the world would be better off without BP. Tony Hayward apologizing on the ad is so phony. There are some good people at BP and they should stay in the oil business, but the company needs to go away.

Goldman, on the other hand, seems to have a Corporate culture of squeezing every possible dollar of profit out of every transaction, and they don’t care who gets damaged. Goldman’s manipulation of commodity prices in 2008, various hedging activities in the housing market, all point to a malignant corporate culture. Their might be a few good people left at GS, but even those people have been so tainted by GS’s culture of “Greed first, greed last, greed always.” GS needs to go away, and anybody tainted by the stain of working at GS needs to be exiled from the financial world. Maybe they can go clean pelicans in Louisiana.

So comparing BP to GS is a choice between worse and worst.

And to top all this off, Bobby Jindal and other gulf state governors keep hounding the feds to lift the moratorium on drilling. Why? To get money flowing. The wages of those oil workers could be covered by unemployment benefits. I suspect what Jindal and the governors really care about is the profits of the oil companies, the royalties from those profits, and the campaign contributions that come from those profits.

Posted by randymiller | Report as abusive
 

Not to say that somewhere down the line he won’t, but even at 20 cents on the dollar Kevin Costner still hasn’t offered to plug Goldman Sachs’ effluent.

Posted by HBC | Report as abusive
 

@Goth – finally someone else with some sense!
Honestly, does anyone commenting on here actually know anything about Goldman OTHER than the crap that the media (encouraged by Obama and his administration) has being spewing for the past year or so??
Here is what most people are complaining about
1) The bailout – hey, guess what? GOLDMAN NEITHER WANTED NOR NEEDED THE BAILOUT. They were forced to take it by the government. I would know, my father works there. It worked like this: many of the banks on Wall Street were on the verge of collapse, so the government was giving them cash to tide them over- the bailout. Goldman was NOT on the verge of collapse. But the government had to give the money to ALL of the banks, otherwise the bailout would have just shown exactly which banks were failing, then nobody would put their money in those banks, and those banks would fail even WITH the bailout. So, Goldman was pushed into it by the government. By the way, Goldman paid it back as soon as they were allowed to, with HUGE interest- so everyone complaining about Goldman stealing “taxpayer money” – you MADE money off of Goldman. Or the government did, at least.

2) The synthetic CDO trades in which Goldman allegedly lied about what was being traded. Goldman was accused of fraud, and there was a Senate hearing. Did any of you watch the hearing? It was a JOKE. The Senators clearly had no clue how financial markets work. The deal that Goldman was involved in was with professional investors. Both Paulson (or someone representing him, more likely) and the company investing were in a meeting room, together, and they picked out which securities they wanted to hedge. So obviously, Goldman wasn’t “duping” the investors- the investors picked the securities. In the end, a synthetic CDO is just a bet- one group bets that the price of the securities will rise, the other group bets it will fall. Paulson won the bet, since he bet that the price of housing would fall. And it did. The government really has no case against Goldman. But, since the American public is apparently full of ignorant people, the minute that Goldman was accused of fraud, everyone bought it. It is a shame that a company like Goldman can be brought down simply because Obama’s ratings were down and he wanted to make a move against Wall Street, so he managed to get them accused of fraud. If you don’t believe that Obama, or someone in his administration, had something to do with the accusation- then you are naive.

3) In the same case where Goldman was accused of fraud, the Senators at the hearing kept saying nonsense about Goldman not telling the other company that Paulson was the investor on the other side of the deal. As I said earlier- they all sat down in a meeting room together, so obviously the other company knew. Secondly, Goldman has no obligation to tell them anyway! That’s not how those deals work! This is just another example of how little the Senators know about financial market making.

If Americans don’t wake up and realize how Obama and his administration are turning this country SOCIALIST, we will become the next Greece.

I suggest you all read Ayn Rand’s “Atlas Shrugged’. We need a John Galt, and fast.

Posted by ragnes18 | Report as abusive
 

Indeed we do, ragnes. It’s funny how arrogant bankers conveniently forget that book details the failure of bankers who need to be saved by someone who actually produces something of value.

Hint: It’s not another banker.

1) Keep proclaiming how much Goldman didn’t need “the bailout” and maybe someone will believe you. By the way, would that be the AIG bailout?

2) Quit lying. You got caught. Shut up.

3) See #2. By the way, this is still the same story. Didn’t Goldman teach you how to count?

Republicans and Wall Street want to make this country even more fascist than it already is. Financial services are a utility – they add no value, and should be regulated as such.

Posted by Unsympathetic | Report as abusive
 

Unsympathetic, GS had a relatively small amount of direct exposure to AIG going bankrupt – on the order of a few hundred million at the most. They held collateral against the CDSes written by AIG and had CDSes written against AIG and the market value of the debt made up the rest. You can make an argument that if AIG had gone bankrupt that all hell would have broken loose and GS would have been killed in the backwash but that isn’t what you are arguing.

As for TARP, it was touch and go for GS for a while but by the time they were “bailed out” the crisis had long past.

As for the ABACUS case I can’t think of a single market professional who is sympathetic to the government’s “case”, with the exception of Takavokli, and the SEC states in its case that Paulson representatives met with ACA on a regular basis and ACA-M picked the portfolio with Paulson input. That is not denied by anyone with even a passing acquaintance with the case.

As for adding no utility, I assume you don’t like all those VC funded firms who provide you with mobile phones, home computers, web browsers etc and I assume you keep your money in cash under the mattress because credit cards and ATMs add no value.

Posted by Danny_Black | Report as abusive
 

Point One, GS was exposed on AIG. Point 2, the culture within GS was either morally bankrupt (ie encouraged the fabulous Fabrice) or morally vacuous (no way to control or rein in FF)
Point 3 VC firms go bust and they have an idea to exploit the product. What products have GS brought to market? (I am choosing to ignore the point that GS is not (properly understood) a VC firm.
Point 4, GS had inside information on Lehman’s (who do you think was briefing against them????) and helped to encourage their demise.
Point 5. When Buffett invested his money in Goldman, it makes me wonder which is worse: being the pimp or the prostitute?
Point 6. life inside GS is not a bed of roses and does not create well rounded corporate citizens. Instead one finds Hobbessian citizen who has no allegiance except to the partnership in the hopes that one day they can be included in the partnership.
Point 7. Would BP have been in as much trouble if it had its ex-employees embedded in DC or the Obama Administration? Can you imagine the outrage and hysteria if Ken Salazar had been the ex CEO of BP? Think about it, BP has done LESS to America and the world economy than Goldman Sachs and the other investment bankers. Nature will take care of itself, but who will replenish all the empty pension funds drained by the special vehicles created by GS and Co?

Posted by sgreillylives | Report as abusive
 

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