BP And Goldman Sachs: Gambling With Your Money

Goldman Sachs

BP

Goldman Sachs CEO Says He Is "Doing God's Work," But "Could Slit My Wrists And People Would Cheer." According to the London Times, "'I know I could slit my wrists and people would cheer,' [Goldman Sachs CEO Lloyd Blankfein] says. But then, he slowly begins to argue the case for modern banking. 'We're very important,' he says, abandoning self-flagellation. 'We help companies to grow by helping them to raise capital. Companies that grow create wealth. This, in turn, allows people to have jobs that create more growth and more wealth. It's a virtuous cycle.' To drive home his point, he makes a remarkably bold claim. 'We have a social purpose.' [...] Goldman Sachs, this pillar of the free market, breeder of super-citizens, object of envy and awe will go on raking it in, getting richer than God? An impish grin spreads across Blankfein's face. Call him a fat cat who mocks the public. Call him wicked. Call him what you will. He is, he says, just a banker 'doing God's work.'" [London Times, 11/8/09]

BP CEO: "What The Hell Did We Do To Deserve This." According to the New York Times, "BP says that the offshore drilling accident that is spewing thousands of barrels of oil a day into the Gulf of Mexico could cost the company several hundred million dollars... For Tony Hayward, who has led BP for the last three years, the accident threatens to overshadow all of the efforts he has made to burnish the tattered reputation of the company after a refinery explosion in Texas in 2005 and a pipeline leak in Alaska in 2006. As Mr. Hayward said to fellow executives in his London office recently, 'What the hell did we do to deserve this?'" [New York Times, 4/29/10]

Goldman Sachs

BP

Goldman Sachs Earned $3.46 Billion In 1Q 2010. According to the Associated Press, "Trading helped Goldman score another impressive quarter. The banks said its first-quarter earnings almost doubled to $3.46 billion as its trading business again surpassed the rest of the financial industry.  Goldman Sachs earned $5.59 a share on revenue of $12.78 billion as bond, commodities and currency trading buoyed its profits. That was well above expectations of analysts surveyed by Thomson Reuters. It was Goldman's second most profitable quarter since going public in 1999. In the fourth quarter, Goldman Sachs earned a record $4.9 billion." [Associated Press, 4/20/10]

BP's 1Q 2010 Profit Rose 135% To $5.5 Billion. According to BP's website, "BP's first-quarter replacement cost profit was $5,598 million, compared with $2,387 million a year ago, an increase of 135%." [BP.com, accessed 5/3/10]

Goldman Sachs

BP

Betting Against The Economy, Goldman Sachs Profited Off The Housing Crisis.  According to the Daily Mail: "Top executives at Goldman Sachs boasted that they were making 'some serious money' as millions of homeowners around the world were plunged into misery by the housing crash. Chief executive Lloyd Blankfein admitted in one email that the bank gambled on the market going down. 'Of course we didn't dodge the mortgage mess,' Mr Blankfein wrote on November 18, 2007. 'We lost money, then made more than we lost because of the shorts,' he added, referring to the practice of 'shorting', or betting against an investment. In another email written as the credit crunch began to bite in October, 2007, senior Goldman executive Michael Swenson said: 'Sounds like we will make some serious money.'" [Daily Mail, 4/26/10]

BP Spill Will Cost Billions, Damage Economy, Increases Likelihood Of A "Double Dip" Recession. According to David Kotok of Cumberland Advisers, "This will be a financial calamity for many firms, not just BP and its partners and service providers.  Their liabilities are immense and must not be underestimated.  The first estimate of $12.5 billion is only a starter... Federal deficit spending will certainly rise by tens, and maybe hundreds, of billions as emergency appropriations are directed at larger and larger efforts to clean up this mess. At the same time, federal and state revenues tied to Gulf-region businesses will fall." Kotok added, "We expect to see the deterioration of the economic statistics for the US to reveal the onset of this oil-slick crisis in May, and the negative impact will intensify during the summer months. A 'double-dip' recession probably has been made more likely by this tragedy." [Cumberland Market Commentary via Business Insider, 5/2/10]

Goldman Sachs

BP

Goldman Sachs Spent Nearly $3 Million On Lobbying In 2009.  According to the Center for Responsive Politics, Goldman Sachs spent over $2.8 million on lobbying in 2009. [Center for Responsive Politics, accessed 5/3/10]

BP Spent Over $15.9 Million On Lobbying In 2009.  According to the Center for Responsive Politics, BP spent over $15.9 million on lobbying in 2009. [Center for Responsive Politics, accessed 5/3/10]

Goldman Sachs

BP

Goldman Sachs Assembled Veteran Washington Insiders To Fight Fraud Allegations.  According to the Washington Post, "faced with fraud charges, investigations, a firestorm of criticism and a regulatory overhaul bill that could seriously damage its profitability, the venerable Wall Street firm is assembling a team of veteran lobbyists well-connected former Hill staffers and top public relations strategists to confront what is arguably the most traumatic moment in its 140-year history." [Washington Post, 4/29/10]

BP Hired FIVE Firms To Help Them Manage Their Public Relations Crises. According to Roll Call: "BP and its allies are drawing on their considerable resources and deep lobbying teams in Washington as they seek to mitigate the fallout - including Congressional grillings and possible legislative action - from the oil spill in the Gulf of Mexico...These companies also employ powerful outside firms. This year, BP has employed five outside firms, including the Democratically connected Podesta Group and the Duberstein Group, which has strong GOP ties." [Roll Call, 5/4/10, subscription required]

Goldman Sachs

BP

SEC Filed Suit Against Goldman Sachs After It "Emerged From The Financial Crisis Stronger Than Before." According to the Washington Post: "The Securities and Exchange Commission filed fraud charges against Goldman Sachs on Friday, alleging that the famously successful but vilified Wall Street bank sold investors a subprime-mortgage investment that was secretly designed to lose value. In filing the civil suit, the agency targets one of the few banks that, with the help of taxpayer bailouts, emerged from the financial crisis stronger than before." [Washington Post, 4/17/10]

SEC Handed Goldman Sachs Suit To Justice Department For Criminal Prosecution.  According to the Washington Post: "The Securities and Exchange Commission has referred its investigation of Goldman Sachs to the Justice Department for possible criminal prosecution, less than two weeks after filing a civil securities fraud case against the firm, according to a source familiar with the matter...The Justice Department usually investigates high-profile cases of securities fraud, but the threshold for criminal prosecution is significantly higher than that of civil cases. The SEC files only civil cases." [Washington Post, 4/30/10]

2007: BP Paid Millions To Settle After An Explosion, Oil Spill, And Accusations It "Manipulated The Propane Market."  According to Reuters: "BP on Thursday agreed to pay $373 million (182 million pounds) to settle U.S. charges stemming from a deadly Texas refinery explosion, an Alaska oil spill and allegations it manipulated the propane market...'These agreements are an admission that, in these instances, our operations failed to meet our own standards and the requirements of the law,' said Bob Malone, chairman of BP's U.S. subsidiary. 'For that, we apologize.'" [Reuters, 10/26/07]