5. Goldman Scalps Calpers
Just when oil spillin' villain BP (BP) - Get Report (Stock Quote: BP) officially claims Goldman Sachs' (GS) - Get Report (Stock Quote: GS) crown as the most hated company on earth ... The Vampire Squid Strikes Back. According to Reuters, Goldman Sachs allegedly lied to Calpers when it was seeking a consulting mandate from the pension fund giant. Goldman's truth-bending seemingly occurred this past March when it assured Calpers that it was not "the target of a formal investigation." On April 16, the Securities and Exchange Commission filed a civil fraud suit against Goldman over a subprime mortgage bond transaction, a charge that arrived six months after regulators warned the investment bank that legal action was likely.
Goldman is one 32 firms the giant pension fund is considering to serve as consultants on real estate-related investments with a final decision set for July 1st, according to Reuters. A Calpers spokesman told Reuters the pension fund "will be reaching out to Goldman for an explanation on their response."
(BP) - Get Report (GS) - Get Report Oy! Here we go again. We can already hear Goldman's rope-a-dope replies: It depends on what the meaning of the word "formal" is. Are you referring to our attire at the time?
Goldman maintains it did not disclose the Wells Notice in regulatory filings because its lawyers viewed the issue was immaterial to the firm's overall revenues. Goldman's application to Calpers, signed by a Goldman managing director on the West Coast, was not submitted under oath, says Reuters.
Dumb-o-meter score: 75 -- The Dumbest Dream Team: BP and Goldman Sachs.
4. Ludicrous Lawsuits
While it is our sworn duty to seek out and report acts of business buffoonery, we here at the Five Dumbest Lab firmly maintain that we are by no means anti-business, just anti-dumb. In fact, we believe that few organizations are more sympathetic to corporate America's plight than us, especially when it comes to outlandish lawsuits like the pair we witnessed late last week.
First up, a Michigan woman is suing United Airlines (UAUA) (Stock Quote: UAUA) for negligence and distress after she fell asleep on a United Express flight to Philadelphia only to wake up alone on the plane more than three hours after it landed. Ginger McGuire claimed she was cooped up in the jumbo jet for an additional 15 minutes after she awoke, pacing the aisles until police finally unlocked the door and demanded identification.
"For a crew to leave her there and lock her is beyond a gross abuse," said McGuire's attorney, Geoffrey Fieger.
(UAUA) We object, counselor! For a judge and jury to be locked in a courtroom and forced to listen to this nonsense would be the real gross abuse. In this case, we are united with United when we say it's time for McGuire and Feiger to wake up and smell the stupidity.
(BP) - Get Report (GS) - Get Report (UAUA) Similarly, we have zero compassion for Lauren Rosenberg, the Los Angeles-area woman suing Google (GOOG) - Get Report (Stock Quote: GOOG) for more than $100,000, alleging that Google Maps led her onto a dangerous Utah roadway where she was struck by a car causing her physical and emotional pain.
The suit states: "Google undertook the duty to exercise reasonable care in providing safe directions to patrons of its Google Maps service. But Google failed to warn plaintiff Rosenberg of said known dangers...."
(BP) - Get Report (GS) - Get Report (UAUA) (GOOG) - Get Report What a crock! Rosenberg's injuries may be unfortunate, but she can't blame Google for giving her bad directions. We garner that if she Googled "frivolous lawsuit" her very own case may appear near the top of the heap. And if not, then it should.
Dumb-o-meter score: 80 -- Dumb lawsuits are bad for everybody's business ... but ours!
3. Moody's Miasma
We're not sure what to do with Warren Buffett anymore. For a guy who famously said, "It's better to hang out with people better than you," he sure has been keeping some pretty low-brow company lately.
(BP) - Get Report (GS) - Get Report (UAUA) (GOOG) - Get Report Only a few weeks removed from defending Goldman Sachs CEO Lloyd Blankfein over his role in the investment bank's fraud suit, Buffett joined Moody's (MCO) - Get Report CEO Raymond McDaniel at a Congressional hearing Wednesday to discuss the failure of the ratings agency during the credit crisis. As Moody's largest shareholder, the billionaire investor defended the company even though the firm stamped the most toxic of mortgage bonds with triple-A grades, including the ill-fated Abacus deal that sank Goldman.
(BP) - Get Report (GS) - Get Report (UAUA) (GOOG) - Get Report (MCO) - Get Report Buffett said the agencies "made the wrong call," but were not alone. Of course, that doesn't make it right, but that didn't seem to occur to the Berkshire Hathaway Chairman when he was joyfully watching Moody's revenue jump from $600 million in 2000 to $2.2 billion in 2007.
"The entire American public was caught up in a belief that housing prices could not fall dramatically," said Buffett, who added that despite his stake in Moody's he never relies on credit ratings when making investment decisions.
(BP) - Get Report (GS) - Get Report (UAUA) (GOOG) - Get Report (MCO) - Get Report That's a shame. If only he took a quick look into Moody's ratings at the time, then maybe the Oracle of Omaha would have seen what kind of crap his portfolio company was peddling. He sure has no problem taste-testing cherry Cokes (KO) - Get Report (Stock Quote: KO), See's Candies and Dairy Queen milk shakes during his Berkshire jamborees, now does he?
Quizzically, McDaniel also argued against the usefulness of his own ratings, telling the panel that that investors should use ratings as a tool, "not a buy, sell or hold recommendation."
(BP) - Get Report (GS) - Get Report (UAUA) (GOOG) - Get Report (MCO) - Get Report (KO) - Get Report Wow. Talk about a ringing endorsement from the boss. That said, it's still better than an empty platitude from an increasingly suspect Buffett.
Dumb-o-meter score: 85 -- We find ourselves growing moodier and moodier whenever we hear Buffett defend Moody's. You too?
2. BP's Blunder
After its "top kill" solution to plug the undersea gusher with golf balls and junk failed last weekend, BP moved onto yet another Rube Goldberg scheme -- which actually increases the flow of oil by 20% before, ostensibly, reducing it. The company's latest plan is to use robot submarines to cut away what is left of the ruined offshore well's leaking riser pipe, then lower a containment dome over the remaining wellhead assembly.
Not that it matters. BP's bad luck struck again on Wednesday when a diamond-edged saw became stuck in a thick pipe on a blown-out well at the bottom of the Gulf of Mexico. Engineers had to bring in a second saw.
(BP) - Get Report If they happen to require yet another saw to finish the job, we here at the Dumbest Lab sincerely suggest they try a new supplier. Clearly they need to stop purchasing their oil-spill equipment from the same Acme store where Wile E. Coyote shops when trying to stop the Roadrunner.
This latest strategy may be the oil company's last best hope before August, when BP expects to finish drilling two emergency relief wells. In the meantime, U.S. Attorney General Eric Holder says he will be aggressively investigating the spill and "if we find evidence of illegal behavior, we will be forceful in our response."
Dumb-o-meter score: 95 -- The government is relying on James Cameron and Kevin Costner to solve the crisis. That's good news for us. We can finally say "Hooray for Hollywood!" and mean it.
1. Hayward's Perfect Score
If only BP chief executive Tony Hayward could force a plug into his leaky oil well as firmly as he shoved his foot in his mouth, then this oil-spill nightmare would be over.
The embattled oil executive said in a Sunday interview that he would "like my life back," even as the massive oil spill continued to cause ecological havoc along the Gulf coast. Hayward later apologized in a post to BP America's Facebook page saying he made a "hurtful and thoughtless comment."
"When I read that recently, I was appalled," wrote Hayward.
You weren't the only one, dude. Eleven rig workers died on the BP-leased Deepwater Horizon drilling platform when it exploded on April 20, and you can bet their loved ones would give anything to get those lives back as well.
"Those words don't represent how I feel about this tragedy, and certainly don't represent the hearts of the people of BP -- many of whom live and work in the Gulf -- who are doing everything they can to make things right," said Hayward.
Look, we understand the pressure Hayward is under to fix this thing. We know it can't be easy on him.
But all these botched solutions have worn out our patience as well. So hopefully the world will understand what we mean when we tell Tony to "get a life!"
(BP) - Get Report (GS) - Get Report (UAUA) (GOOG) - Get Report (MCO) - Get Report (KO) - Get Report (BP) - Get ReportDumb-o-meter score: 100 -- Yep, Tony merits a perfect score for that stupid comment. Now fix the bloody leak already!