Former Goldman exec causes an uproar
On his last day there, Greg Smith slams the company as a morally bankrupt place he is no longer proud of.
The big match was Smith's devastating New York Times opinion piece that had Wall Street in a whirlwind. It's a revelatory piece about the Wall Street firm's moral decline in the nearly 12 years Smith worked there. Now he describes the environment as "toxic and destructive."
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There's a lot more. What's shocking to so many readers is that such a high-level executive would have any criticism of a company legendary for its internal secrecy. The No. 1 rule of Goldman Sachs is that you don't talk about Goldman Sachs -- and the higher up you are, the more you adhere to it.
Goldman Sachs shares were down nearly 3% Wednesday to $120.84.
Smith says he is an executive director and the head of Goldman's U.S. equity derivatives business in Europe, the Middle East and Africa. He worked in New York for 10 years and was based most recently in London.
An ongoing theme in Smith's piece is that Goldman treats clients like personal ATMs, wringing money from them at every turn. Sales meetings are focused on how to make money off of clients, not how to help them, he writes. "It makes me ill how callously people talk about ripping their clients off," he adds.
The most memorable part of the whole thing? In the past year, five executives have called their own clients "muppets," sometimes over internal email, he adds. Cue the theme from "The Muppet Show"!
Smith said he wrote his piece as a wake-up call to the board of directors. The company needs to focus on clients again, because without them it won't make money. "Weed out the morally bankrupt people, no matter how much money they make for the firm," he writes. "And get the culture right again, so people want to work here for the right reasons."
How will Goldman's clients respond to this? Bloomberg interviewed one who said that he is just fine with the company and that Smith's lecture doesn't affect him one bit. Goldman was no doubt doing whatever it can to manage clients Wednesday who might have some questions.
A former intern under Smith tells Business Insider that he was one of the nicer and more genuine guys there. "I hold him in very high regard," Avaneesh Singh Saluja wrote.
One of the more humorous reactions to Smith's piece came from The Daily Mash, which featured a parody piece by Darth Vader on why he is leaving the Empire. "The Empire today has become too much about shortcuts and not enough about remote strangulation," Vader writes. "It just doesn't feel right to me anymore."
It figures they would all make jokes and laugh about the piece. They are proving how right this guy is though, how morally bankrupt they all are. Not a big surprise to me, but it is nice to finally have someone admit it on paper.
News Flash! Goldman Sachs is corrupt!
Everyone knows this. The only surprise is that a GS executive is admitting to it. Yaaaawn.......
Years ago, I am 84 now, worked for a stock broker in NYC. As a bookkeeper accountant, I
would go into these businesses he bought, straighten out the books for an SEC audit and then
when they certify the books were accurate, he would go public with them and sell the shares to
his clients. They were all dogs. One outfit went out of business and he kept trading its' stock.
I asked him "what do you tell your clients when they ask you why the stock failed?" He said to me,
I tell them "you win a few and you lose a few. He had it arranged so that those companies could
not be traced to him. Wall Street was full of crooks since it began. After a few more disgusting
experiences in keeping the books, I bought a small dairy farm and though I never made money
in dairying, I will die a happy man with a clear conscience
Goldman Sachs along with others have been driving up the cost of gas and other essentials by manipulating the commodities market. Everyone in washington knows this; But, nothing is done to stop them. They have received billions in 0% loans and used our own money to rob us.
All government guaranteed loans should be made directly for a small interest. This would cut house notes by half or more and reduce rentals greatly. Trillions would be left in the hands of our people instead of thieving banks. Our financial system is corrupt to the bone and there is nothing they want do. It takes a totally owned government to give these low life pigs a license to steal. Why should anyone pay a bank 600k for a 200k house when the tax payer backs the loan? We are crazy to permit this.
The people of America will force real change or we will be pushed into depression and chaos. The culture the runs banking, wall street and big corporations along with their government are destroying our country. The question is this: Will we allow these morally and spiritually bankrupt pigs to destroy America?
The start to change is to change the Congress. Country needs to elect responsible non-millionairs moderates. No tea baggers or liberals, right wing conservatives or left wing socialist. We need people with Vision and Compassion. People that Care and want to Elevate this Country
I honestly don't care why the guy went off at GS., integrity or anger. Either way I'm sure he is telling the truth. To the GS client that doesn't care ,I imagine he is more than a small time investor and is happy to reap the rewards with no concern for the country as a whole. Couldn't care less how this criminality effects the masses as far as the few continue to prosper. And this deregulate garbage amazes me. If it was only coming from the very wealthy at the top it would be more understandable, It is those of you that are actually still part of middle America and below that regurgitate this Republican talking point that drive me crazy. Read, study and analyze. Check the facts, check historical trends, check something besides FOX. For the record I am a registered independent don't go, "all blue liberal" on me. I am a proud independent, proud to have independent thought, with the end result being a rational voting loyalty to the truth instead of hate filled vitriol. Two more points for the record I also do not find ay thing offensive abu being considered a liberal thinker, look up the definition, part of it being open to new ideas. I have no problem with that. And in addition while I may not be in the top 1% of the population from a financial standpoint but do fall in the top 10%. just want to get ahead of the bashing assumptions that are about to come.
This isn’t new news to me. I’ve seen the same behavior in other Wall Street firms too. It’s pervasive. It also reminds me of the culture within Enron before it went bankrupt, which I still characterize as a firm that primarily transferred Wall Street practices to the energy industry. One thing for sure, Greg Smith didn’t learn this kind of behavior from his instructors at Stanford. You can only learn this kind of behavior on the street; Wall Street.
Thanks, Sasha, for beiong the one to jump in here and blame it all on "capitalism". If anyone thinks our over-regulated, government-protected, economy is based on "capitalism", go take an economics course or two to get yourself straightened out.
Greed exists in every type and kind of economy there is - including the majny forms of socialism that exist out there. In fact, with each passing year, the US economy becomes much more socialist in nature than free-market capitalist.
And no, I'm not blaming just the liberals for it - the 8 years of record-breaking spending done by the neo-cons prior to Obama were just as bad.
Greed is the culprit at places like Goldman Sachs - legalized, government-sponsored greed. You have your elected federal politicians to thank for it every bit as much as the Goldman Sachs executives(and their ilk at other firms) who have bought and paid them off.
good for him ... it has long been said "buyer beware" but I would like to think my Mom and Dad's hard earned money is invested with a company that works for them instead of leaching off them. Moral decay is rampant in society on every level...I have seen it change, we all have.
Corruption, greed, incompetance and immoral business ethics are nothing new. Think Tammany Hall, Chicago politics and the long array of dishonest politicians who have come and gone through the doors of Wash DC. I'm not at all surprised by this. Business and politics as usual.
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