Goldman Sachs' "El Paso"


You have likely heard the song, "El Paso" by Marty Robbins. It is one of the most well known Texan country songs of all time, covered by many. Well, it turns out, Goldman Sachs (NYS: GS) has its own version of the song, and I'd like to share it with you here. Pull up a chair, grab a plate of beans and corn bread, and listen to the tale of a little ole' investment bank that fell in love.

"El Paso" as written by Goldman Sachs:

Out in the East Texas town of old Houston
I fell in love with an oil and gas girl.
Investors would find me in Kinder Morgan's (NYS: KMP) cantina;
Money would flow and investors would twirl.

19% was my piece of Kinder
4 billion bucks and two seats on the board.
My love was deep for this petroleum maiden;
I was in love but in vain, I could tell.

One night a wild young cowboy came in,
His name was El Paso, a natural gas play.
Dashing and daring,
A spin-off he was planning
Kinder Morgan winked,
And my mind went to work

I asked El Paso for the right to advise
Down went his hand for a signed partnership.
I didn't tell him my love for old Kinder;
Lawyers and lawmen would have ended my game.

But then, instead of an easy spin-off,
My love Kinder offered $21 billion in cash.
When the courts found out I had a hand in each pocket,
The judge, he told me I deserved a lash.

The media said I failed to disclose,
That I hurt El Paso investors and stepped on their toes.
I caught a good one, but admit no wrong.
'Full and fair price' -- I sang that song.

I never was a Kinder advisor;
I only spent some time on the board.
El Paso was the one who enlisted my service;
How could I have known to cut the cord?

El Paso investors, they did sue;
Kinder Morgan had to pay what was due:
$110 million in court-ordered fees,
My love triangle began to die.

When it came time for me to collect my pay,
The $20 million was not part of the deal they had made.
I was quite sad, for I had worked for free,
But who really cares; our money grows on trees.

Written in September, 2012.

So there you have it, a country-western song, redone by chart-topping Goldman Sachs. To me, the song is about how Goldman, who held a large interest in Kinder Morgan, was advising El Paso on a spin-off deal. After Goldman valued the spin-off at around $8-$10 billion, Kinder Morgan magically stepped in and offered to buy the whole company. Goldman was said to have no prior knowledge of the company's interest in El Paso, but who could be sure?

In this era of constant scrutiny, it just doesn't make sense for a company like Goldman to play both sides of the fiddle and expect no one to care. In the scheme of things, the $20 million isn't going to hurt Goldman too much, as is surmised at the end of the song. What does hurt, though, is that the company worked for free -- which is against everything Goldman Sachs has ever been about.

Early twentieth-century comedian Eddie Cantor, as mentioned in a BusinessWeek article, once sued Goldman for $100 million after losing $100,000 in the market crash of 1929. In a skit, he and a stooge would stand on stage. The stooge would be trying to squeeze juice out of a dry lemon. After Cantor asks, "Who are you?" The stooge bluntly replies, "I'm the margin clerk for Goldman Sachs."

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