On Goldman Executive Greg Smith’s "Devastating" Brave Departure -by Matt Taibbi
On Goldman Executive Greg Smith’s Brave Departure
Matt Taibbi
Rolling Stone
March 14, 11:06 AM ET
Wall Street is buzzing this morning about a resignation – a historic one. Greg Smith, the executive director and head of Goldman Sachs’s United States equity derivatives business in Europe, the Middle East and Africa, not only decided to quit Goldman, he decided to do it in the New York Times, eloquently deconstructing the firm’s moral slide in a lengthy op-ed piece.
The essence of Smith’s piece is devastating. He points to one simple, specific problem in the company: the fact that Goldman routinely screws its own clients. Anyone familiar with the report prepared by Senator Carl Levin’s Permanent Subcommittee on Investigations will recognize the jargon Smith points to in this line, in which he talks about what one has to do to become a leader in today’s Goldman:
Execute on the firm’s “axes,” which is Goldman-speak for persuading your clients to invest in the stocks or other products that we are trying to get rid of because they are not seen as having a lot of potential profit.
We heard about “axes” before in the tales about loser mortgage-derivative products like Timberwolf – that Goldman gave incentives to executives to unload its most toxic crap on clients. It was one thing to read about it in a Senate report, but here we have it from one of the firm’s own partners. He goes further, talking about the ways in which Goldman executives derided their own clients as fools and dupes:
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.
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THE REST:
http://www.rollingstone.com/politics/blogs/taibblog/a-goldman-executives-brave-departure-20120314
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Frank Rich on the National Circus:
Goldman Sachs executive Greg Smith resigned today by very publicly flipping the bird at the firm in the form of a Times op-ed. Does it matter at all?
Every American should read this powerful piece. Here is a bright young rising Goldman star – one of ten people (out of more than 30,000 employees) chosen to appear in Goldman’s college recruiting video – saying that he is quitting because of the firm’s “moral fiber.” He describes a workplace where executives openly deride their own clients as “muppets” and pursue any ethical shortcut at hand to make a buck:
“Today, if you make enough money for the firm (and are not currently an ax murderer) you will be promoted into a position of influence.” This is not just a Goldman problem. This is the larger culture that caused the meltdown of 2008 and will cause the next. The Obama administration’s failure to hold the financial sector to account for its last round of shortcuts still haunts it. That the president is likely to run against an actual representative of that tarnished sector, the Man from Bain, remains his luckiest political break.
http://nymag.com/daily/intel/2012/03/frank-rich-on-the-national-circus-overestimating-mitt.html
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