Will Goldman's CEO survive Greg Smith's rant?

Lloyd Blankfein is in the crosshairs after a former employee accuses the company of ripping off its clients.

By TheWeek.com Mar 15, 2012 4:06PM
In the banking equivalent of the shot heard round the world, Goldman Sachs (GS) executive Greg Smith announced his resignation Wednesday in a devastating New York Times opinion piece that accused the firm of ruthlessly exploiting its clients for profit.

Smith assailed Goldman for its "toxic and destructive" business practices and "morally bankrupt" culture, and placed the blame squarely on CEO Lloyd Blankfein. The controversial Goldman boss has already been blasted by lawmakers for his company's dubious deals, and has forked over millions of dollars to settle fraud charges brought by the SEC.

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Smith's rant wasn't just a public relations debacle: Goldman's stock price dropped 3.4% the day the op-ed was published, wiping out $2.2 billion in shareholder value.

Will Blankfein be forced to resign?

Goldman must oust Blankfein: Smith's resignation letter "would be a devastating indictment of any kind of business," says Frederick E. Allen at Forbes, but it's particularly bad for a bank supposedly built on trust. Goldman's clients (whom the firm's employees apparently call "muppets") now know they're being ripped off at every turn. "Isn't a flight to the doors inevitable," Allen asked. Goldman has brought this "terrible damage" on itself, and "must take drastic action to restore its reputation." The company's reform "must start at the top."

But Blankfein is still quite popular: Blankfein has the best approval rating of any CEO on Wall Street, says Jane Wells at CNBC. According to Glassdoor.com, 94% of Goldman employees approve of his leadership, and Goldman itself outranks JPMorgan Chase (JPM) and Citigroup (C) for employee satisfaction. Clearly, not everyone is as disgruntled as Greg Smith.


Goldman will have to change:
The easiest way to change perceptions of Goldman is to change its leadership, says John Cassidy at The New Yorker. But "given the iron grip that Blankfein exercises on Goldman, I don't think this is going to happen, at least not for awhile." However, even Blankfein "must realize that the take-no-prisoners business model he had championed" is "backfiring." Goldman is up to its ears in conflicts of interest, and has been the most aggressive and shameless profit-hunter on Wall Street -- and now he and the firm are paying the price.

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Tags: CGSJPM
9Comments
Mar 15, 2012 8:32PM
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It's about time someone told the truth about this bubble creating, gas price manipulating slime serpent sucking the very blood out of the American people!

 

Suggest interested readers look up the Rolling Stone article titled: "The Great American Bubble Machine", by Matt Tiebie (sp?)

Mar 15, 2012 8:16PM
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Goldman employees approve of his leadership

 

So the Beatles were wrong, you can buy me love.

Mar 15, 2012 11:35PM
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LoL, he gave new meaning to the truth will set you free. 

I notice that Goldman's is not suing which means the rant was probably true.  If I had that kind of money, I would no longer deal with these folks for anything. 

 

Goldman's lost me a long time ago anyway.  I consider them in the same lane as the defunct Enron. 

Mar 15, 2012 9:10PM
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Of course they'll survive. The government is always ready to bail them out.
Mar 15, 2012 11:01PM
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Yes, great article in last years Rolling Stone magazine " The Great American Bubble" talking about the insiders of wall street.  Everyone who is interested in this topic and the going's on at Goldman should read it.
Mar 16, 2012 6:29AM
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Will he survive? The guys rich as heak. Will he survive? I bet if he gets his expenses down to half a mil or so a year he'll squeak by for the next 50 or 60 years.
Mar 16, 2012 3:09AM
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i hope now that one person has finely stood up to  big  money  some  more will follow  its  time  big  money  and government  both got there butts  kicked.  they both  have lied and stole from us for years  come on people  in nov  lets show them all  who runs america  they are so sure they  know what we are going to  do  vote for the  best  person not for  which  party  he  supports  there are good  people out there  just got to weed out the good  ones  watch for the  ones   who  walk the talk
Mar 15, 2012 9:13PM
Mar 15, 2012 9:27PM
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Morality came in as he was told ? ,to go . How sincere took over 10 of his years to find his mouth, ha,ha,ha........., so so petty.  Who will hire you now?.
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