Wednesday, March 14, 2012
Shocked by Shock of Greed
It's difficult to know what to make of former Goldman Sachs employee Greg Smith and his blistering critique of Goldman's corporate culture. In an editorial today for the New York Times, Smith announces his resignation from Goldman to the world, along with what appears to be a heartfelt confession for his years of servitude at the altar of unbridled greed which he's only now realized Goldman is.
According to Smith, Goldman has just recently become the altar of unbridled greed and customer manipulation, and that twelve years into his tenure there, standards have only recently fallen enough to make him realize how morally bankrupt his peers have become. Morally bankrupt, while at the same time lining their pockets and Goldman's bottom line with ill-gotten - yet perfectly legal - booty. Booty from customers who were kicked in theirs; treated like gold mines from which Goldman's traders could plunder using questionable financial products.
"It makes me ill how callously people talk about ripping their clients off," Smith contends in his op-ed for the Times. "Over the last 12 months I have seen five different managing directors refer to their own clients as 'muppets.'"
In their defense, Goldman's public relations folks have issued a hollow rebuttal to their former employee's claims. "We disagree with the views expressed, which we don’t think reflect the way we run our business,” a subjectively-phrased statement meagerly allows. “In our view, we will only be successful if our clients are successful. This fundamental truth lies at the heart of how we conduct ourselves.”
In other words, it's business as usual at Goldman, which for years has thrown out platitudes and morality terminology in sentences they hope people don't spend too much time digesting.
But what about Smith himself? As an executive at Goldman, he must have been earning an income that, for most of the rest of us, likely amounts to a tidy sum. In the New Testament account of Zacchaeus, the repentant tax collector vowed to repay everyone he defrauded, setting the model for a proper demonstration of turning over a new leaf in life. No such offer has come from Smith.
Since he covers himself legally by saying nothing he or Goldman did was criminal, Smith can keep the personal wealth he's accrued during his dozen years at the firm without fear of prosecution or government fines. But since he's the one waging a morality battle, what obligations might he owe his former clients in terms of ways he perpetrated against them the same things he accuses his former co-workers of doing?
Or was Smith about to be fired for not being as unethical towards his clients, and therefore far less valuable to Goldman? If that was the case, wouldn't Smith have had more ammunition in this fight after being fired? Do his claims carry more water if he's a victim himself, or merely an employee who can no longer stomach the attitudes of his peers?
And does walking off an employment cliff, like Smith appears to be doing with his op-ed piece, spell the end of his Wall Street career? After all, what firm - especially in the vicious financial industry - will hire somebody who so earnestly rats on his former employer? Is he simply planning on returning to his native South Africa to surf? Or does he think this stab at integrity might win him a stable-full of ex-Goldman clients so he can launch his own investment firm?
Although I have a good friend from my New York City days who still works in Goldman's back offices, I am not a fan of how the firm does business. So I'm not exactly taking Goldman's side in this. After all, Goldman was hardly a model of morality even twelve years ago, when Smith started with the firm. He knew what he was getting into - nobody courts a Wall Street brokerage position wanting to plant flowers with clients while singing Kumbaya. It's always been about the money, with clients as a means to an end. If it took Smith twelve years to figure that out, who's the fool now?
And with all of his righteous indignation, couldn't Smith have stayed within the paneled walls of Goldman's executive suites and worked to change the flaws in their corporate culture from the inside? If he'd already tried that, you'd think he'd have mentioned it in his op-ed piece. Instead, he takes the holier-than-thou route and jumps ship with an editorial he naively thinks could be a catalyst for change among people who will probably hold him with as much disdain as they apparently hold their clients.
Sure, it would be nice if everybody on Wall Street wakes up from their delusional narcissism and confesses a renewed vow of ethical sobriety. But as long as even Goldman's most disrespected clients continue to make money with them, what's the incentive to leave for a different firm? A firm that still might hold them in derision? After all, everything will still be all about the money.
What Smith needs to learn is that greed is not good. Greed both on the part of Wall Street players and investor clients.
All Smith seems to be confessing is his shock at how evil greed can look.
And the New York Times found that newsworthy?