Why I'm Leaving Goldman Sachs: Op-Ed Decries "Toxic" "Morally Bankrupt" Culture While Progressives Say, "You Just Noticed?"
An op-ed in today's New York Times has the reading public buzzing. It begins thus:
TODAY is my last day at Goldman Sachs. After almost 12 years at the firm — first as a summer intern while at Stanford, then in New York for 10 years, and now in London — I believe I have worked here long enough to understand the trajectory of its culture, its people and its identity. And I can honestly say that the environment now is as toxic and destructive as I have ever seen it.
To put the problem in the simplest terms, the interests of the client continue to be sidelined in the way the firm operates and thinks about making money. Goldman Sachs is one of the world’s largest and most important investment banks and it is too integral to global finance to continue to act this way. The firm has veered so far from the place I joined right out of college that I can no longer in good conscience say that I identify with what it stands for.
The author, Greg Smith, is of course being treated as a Judas by the company-- but his words reveal a former long-term reverence for the company's "culture" of yore that sounds slightly self-delusional.
Here's what Smith has to say about the profit motive that he believes has become the driving force behind all company decisions these days:
What are three quick ways to become a leader? a) Execute on the firm’s “axes,” which is Goldman-speak for persuading your clients to invest in the stocks or other products that we are trying to get rid of because they are not seen as having a lot of potential profit. b) “Hunt Elephants.” In English: get your clients — some of whom are sophisticated, and some of whom aren’t — to trade whatever will bring the biggest profit to Goldman. Call me old-fashioned, but I don’t like selling my clients a product that is wrong for them. c) Find yourself sitting in a seat where your job is to trade any illiquid, opaque product with a three-letter acronym.
It makes me ill how callously people talk about ripping their clients off. Over the last 12 months I have seen five different managing directors refer to their own clients as “muppets,” sometimes over internal e-mail. Even after the S.E.C., Fabulous Fab, Abacus, God’s work, Carl Levin, Vampire Squids? No humility? I mean, come on.
While Smith's op-ed is likely to strike a blow to the brand of Goldman, those who have been following its doings for a longer time are hardly suprised. In his roundup of reactions to the op-ed, The Awl's Choire Sicha notes Goldman's history:
This is a firm that researches its opponents as deeply as any mafia. This is a firm that thinks nothing of sending a former programmer to jail because he was trying to back up some opensource software and included chunks of what the firm considered proprietary software; they stopped at nothing to ruin him along the way. This is a firm that's been nearshoring in Utah for years, so as to capture a highly immobile and not coincidentally highly moral worker population. This is a firm that got vast, disgusting concessions from the City of New York because they pretended they were going to move out of downtown—and then, even after receiving them, expanded their New Jersey headcount, due to more concessions on the other side of the river. This is a firm that practices surveillance-level research on its negotiation counterparties, and has no qualms about bringing their information and forensics to bear in negotiations.
At Think Progress, Travis Waldron notes that the op-ed, whether intentionally or not, " made a compelling case for the Volcker Rule, an element of the Dodd-Frank Wall Street Reform Act that would prohibit proprietary trading at federally-backstopped institutions." And at Public Citizen, Barret Naylor notes, "Smith’s firsthand account emphasizes that each day of delay prolongs the abuse of Wall Street bankers over their clients. '
The Guardian is already reporting that a Liberal Democrat MP in the UK is using the op-ed to call for an end to Government dealings with Goldman. ""We know in the City that Goldmans help themselves before their clients. Now here's the proof...the people of Greece and the rest of the eurozone are paying the price after Goldmans cooked their books and Greece joined the euro at an unsustainably high exchange rate. Until this culture is stamped out, Goldmans are not fit and proper to receive a penny of British taxpayers' money or advise our government in any way."