Greg Smith, Goldman's global head of equity derivatives, resigned today. But he didn't just leave quietly; he wrote a damning Op-Ed piece in the New York Times that shines an arc lamp on Goldman's rapacious, self centered, unbridled greed.
Here is an excerpt:
|"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."|
"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. Integrity? It is eroding. I don’t know of any illegal behavior, but will people push the envelope and pitch lucrative and complicated products to clients even if they are not the simplest investments or the ones most directly aligned with the client’s goals? Absolutely. Every day, in fact."
"These days, the most common question I get from junior analysts about derivatives is, “How much money did we make off the client?” It bothers me every time I hear it, because it is a clear reflection of what they are observing from their leaders about the way they should behave. Now project 10 years into the future: You don’t have to be a rocket scientist to figure out that the junior analyst sitting quietly in the corner of the room hearing about “muppets,” “ripping eyeballs out” and “getting paid” doesn’t exactly turn into a model citizen."
I'v been in the financial industry for 30 plus years. I've seen it all, however, never have I seen it as bad as this. The outright and officially condoned fraud, theft and criminality has run rampant. It has infected our entire economy and worse, it has corrupted and corroded our policy because so many high level policy posts are held by former Goldman employees or employees of other Wall Street firms that practice the same sort of corrupt, predator capitalism as Goldman did (does).
It has to stop. Hopefully this will be a wakeup call, however, I am perhaps too jaded. I am a skeptic. After the shock of this goes away, it will be business as usual, I'm sure. Wall Street has a long history of this sort of thing. It'll be hard to change.