Goldman Sachs exec slams ‘toxic’ bank in resignation letter

Mar 14, 2012

‘If you make enough money and are not an axe murderer you will be promoted,’ says ‘Jerry Maguire’ of Goldman

GOLDMAN SACHS has battened down the hatches this morning after an executive director used an opinion column in The New York Times to make a Jerry Maguire-esque resignation in which he accused the bank of a decline in “moral fibre” and “ripping off” its clients.

Greg Smith, an executive director of Goldman Sachs and head of the firm’s US equity derivatives business in Europe, the Middle East and Africa, has worked at the bank for almost 12 years in both the New York and London offices.

In an op-ed in The New York Times, Smith says that when he joined, the culture at Goldman Sachs “revolved around teamwork, integrity, a spirit of humility, and always doing right by our clients”.

That, he says, is no longer the case. And he places the blame squarely on the shoulders of the current CEO Lloyd Blankfein and President Gary Cohn.

“I have always taken a lot of pride in advising my clients to do what I believe is right for them, even if it means less money for the firm. This view is becoming increasingly unpopular at Goldman Sachs,” he writes.

“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 email.

“I can honestly say that the environment now is as toxic and destructive as I have ever seen it… I truly believe that this decline in the firm’s moral fibre represents the single most serious threat to its long-run survival.”

Smith observes that at Goldman Sachs today, “if you make enough money for the firm (and are not currently an axe murderer) you will be promoted into a position of influence”.

This is not the first time Goldman Sachs has been accused of failing to look after the best interests of its clients. Only last year, a US Senate report accused Goldman of misleading clients, selling them financial instruments it knew to be junk, betting against them and profiting from their losses.

And of course, as Smith himself points out, there is the celebrated ‘vampire squid’ episode, when Rolling Stone magazine compared Goldman Sachs to a blood-sucking cephalopod “wrapped around the face of humanity, relentlessly jamming its blood funnel into anything that smells like money”.

But this is the first time such accusations have been levelled so publicly against America’s fifth-largest bank by one of its own senior employees.

Goldman is yet to respond to the attack, but business journalists have wasted no time, with the BBC’s business editor Robert Peston calling it “astonishing” and The Wall Street Journal’s Iain Martin saying it is “absolutely devastating”.

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We know that the only thing that the greedy people at Goldman Sachs understand is their own money. Quite why anybody employs this firm is a mystery and I hope that the British Government will not waste our taxes by employing them in the future.

FYI, executive director is not a "senior employee." Pretty low down the totem pole.