Hot Crisis/Cold Crisis British Petroleumvs. Goldman Sachs

Rusty Cawley, APR | ColdCrisis.tv

Two crises in the news

Massive oil spill Securities fraud investigation

Distinctlydifferent

BP is a hot crisis

High hazard,high outrage

Hot crisesare rare

Goldman Sachs?Cold crisis

High outrage

But where’s the hazard?

In a nutshell:• Goldman made money on collapse of

subprime mortgage market–Securities backed by high risk/high

return loans• Created a portfolio of these securities– Sold stakes in the portfolio to pension plans and

banks

• Customers bet the market would go up

• Goldman bet it would go down

Meanwhile …

What should Goldman do?

Focus on calming the outrage

1. Acknowledge

2. Be humble

Accept blame, not liability

Lawyers hate it

Executives hate it

The best interest of your

shareholders?

Calm the public or fight the

public?

Manage outrage now,negotiate later

Focus on the moral issues

Avoidthe legal ones

… for now

ColdCrisis.tv