Goldman Sachs Exec Quits, Claiming Firm Is Morally Bankrupt

Greg Smith Goldman Sachs quitIn what may become a textbook example of how to burn a career bridge, a soon-to-depart Goldman Sachs employee has sounded off in an op-ed in The New York Times, warning that the investment bank's culture is little more than a toxic stew of greed that bears little resemblance to its once illustrious past.

Greg Smith (pictured), who serves as head of the firm's U.S. equity derivatives business in Europe, is leaving the firm today after 12 years with the Wall Street icon. As Smith writes, his departure is being driven by what he says is a shift in leadership style that no longer places clients' interests ahead of the firm's.

In his piece, Smith pulls no punches, holding current CEO Lloyd Blankfein and President Gary Cohn accountable for losing hold of the firm's once cherished culture that valued clients' interest above all else and helped make Goldman Sachs the world's premier investment bank.

"[T]he interests of the client continue to be sidelined in the way the firm operates and thinks about making money," Smith writes. "I truly believe that this decline in the firm's moral fiber represents the single most serious threat to its long-run survival."

The Goldman Sachs of today not only places little concern in the needs of its customers, says Smith, who is based in London, but internally mocks them.


Goldman Exec Quits And Writes Searing Op-Ed on Company

"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."

Of course, not everyone believes Smith's rant was simply a polemic written by a well-intentioned albeit disgruntled employee.

As conservative opinion writer David Frum tweeted: "Nice of NYT to give Mr. Smith such a prominent ad for his new financial firm," apparently referring to a new venture Smith is embarking on.

Many other voices across Twitter weighed in. Robert Peston, business editor for the BBC, wrote: "This attack on Goldman Sachs from resigning exec is astonishing. The damage to the firm could be pretty serious."

Investment manager and media contributor Prashant Agrawal tweeted that Smith's column is "about to become the most famous #quit letter ever."

Others were more whimsical, such as this from Slate political reporter Dave Weigel, who tweeted: What I learned today: There's a job opening at Goldman Sachs. #dollardollarbills"

What's the potential fallout from Smith's rant? In The New York Times' own reporting on Smith's column, it observes, "The way he resigned from Goldman Sachs, and what he had to say, could reignite a debate over how much Wall Street has changed in the wake of the financial crisis."


Next: With Bonuses Slashed, Wall Street Is In Crisis


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mrshohn

And he's just now figuring this out? It's been going on for years and he's collected plenty.

March 15 2012 at 4:30 AM Report abuse rate up rate down Reply
David Gibson

He is a very brave man to leave like this. Maybe it will wake up people, that the banks are out for everything they can get. They put you at risk, while not taking any risk themselves.

March 15 2012 at 1:48 AM Report abuse +1 rate up rate down Reply
Don

lindrole7 has summed it up .. Folks, were screwed !

March 15 2012 at 12:35 AM Report abuse rate up rate down Reply
tcol771933

That reply by lindrole7 was the funniest thing i have read in years. Well put

March 15 2012 at 12:32 AM Report abuse rate up rate down Reply
Hilde

Don't invest in Goldman Sachs - better invest in Las Vegas.

March 15 2012 at 12:14 AM Report abuse +1 rate up rate down Reply
stratcat63

Thank you Greg Smith, for having the courage to say what many of us have known all along... The sad fact remains that as long as the greedy Wall Street crooks are making their firms big money, most will be retained, rewarded, and likely promoted. A new generation of recently graduated analysts is being mishandled and groomed by these immoral managers.
Although only Goldman Sachs was fingered here, it’s not much of a stretch to believe this behavior, and worse, is common practice at most all large investment firms.
While immoral activity is not always illegal, there needs to be a much stronger deterrent to engage in either. What’s needed is a clear and strict code of conduct that defines expectations, eliminates grey areas, and enforces tough penalties.
Financial predators must be exposed, terminated, and their questionable assets liquidated. To prevent them from continuing this pattern, offenders should be required to register on a Nationwide Financial Predator data base.

March 15 2012 at 12:06 AM Report abuse +4 rate up rate down Reply
lindrole7

Over five thousand years ago, Moses said to the children of Israel ,
"Pick up your shovels, mount your asses and camels, and I will lead
you to the Promised Land."

Nearly 75 years ago, (when welfare was introduced) Roosevelt said,
"Lay down your shovels, sit on your asses, and light up a Camel,
this--- is--- the Promised Land."

Today, Congress has stolen your shovel, taxed your asses, raised the
price of Camels and mortgaged the Promised Land!
I was so depressed last night thinking about Health Care Plans, the
economy, the wars, lost jobs, savings, Social Security, retirement
funds, etc ......... I called a Suicide Hotline.

I had to press 1 for English. I was connected to a call center in
Pakistan. I told them I was suicidal. They got excited and asked if I
could drive a truck......

Folks, we're screwed!

March 14 2012 at 11:42 PM Report abuse +9 rate up rate down Reply
2 replies to lindrole7's comment
Rhonda

The best laugh this rag has given me in a long while!

March 15 2012 at 12:02 AM Report abuse +1 rate up rate down Reply
A SCENT 4U

NOW THAT WAS FUNNY.

March 15 2012 at 2:15 PM Report abuse +1 rate up rate down Reply
dede4007

Disgruntled employee........yea..............right. Goldman Sachs might want to rethink this strategy. We as the public aren't as stupid as they believe. I believe this man is just telling it LIKE IT IS, and he got SICK OF WHAT WAS HAPPENING. These big companies and their CEO's care NOTHING about investors, or those they think of as "the little people". There are more of us than there are of them, and they should be afraid of one day the people turning on them in revolt. I believe that day is coming.

March 14 2012 at 11:37 PM Report abuse +6 rate up rate down Reply
roaring mouse

"by their fruits ye shall know them"

March 14 2012 at 11:22 PM Report abuse +4 rate up rate down Reply
troopabn

Wasn't Blankfein the one that got a $35,000,000 bonus during the Tarp deal and when Congress asked him how much of a bonus he received, he had to think about it? I think the bonus from the year before that was around $24,000,000. How sad that these guys are so underpaid!

March 14 2012 at 11:17 PM Report abuse +5 rate up rate down Reply

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