Looking For An Honest Man? Meet Greg Smith of Wall Street
March 14, 2012 Leave a comment
Oh, this is delightful! It turns out Diogenes, in his perpetual search for an honest man, may have been able to find one on Wall Street, of all places.
A former executive director of Goldman Sachs, Greg Smith, left the company because he was fed up with their sleazy corporate culture and business practices, and took them to task in an editorial in the New York Times. Goldman Sachs was one of the main culprits in Wall Street’s meltdown just a few short years ago. If the company was based in Japan, we’d no doubt have seen some of the executives resign in shame, or even commit seppuku, after dragging their company, their customers, and their nation’s economy over the cliff in a selfish pursuit of reckless profit for its own sake. But we’re not in Japan, and our Wall Street execs have no such sense of honor or shame. Smith says,
I can honestly say that the environment now is as toxic and destructive as I have ever seen it.
And in what must surely be one of the most unexpected and welcome pronouncements from a Wall Street executive in 21st century Gordon Gecko- and Ayn Rand -worshipping America, Smith says,
I truly believe that this decline in the firm’s moral fiber represents the single most serious threat to its long-run survival.
And then he tops that one with
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.
What’s sad is that this kind of sentiment is so unusual.
But not only unusual: despised. As financial media giant Bloomberg demonstrates in a petulant unsigned editorial that paints Mr. Smith as a starry-eyed idealistic naif – the same Mr. Smith who, after 12 years at Goldman Sachs, had clients whose total net worth was over a trillion, with a tr, dollars. How big does one have to be to impress the editorial staff at Bloomberg? What part of Smith’s editorial comes in for the most dismissive attack from Bloomberg? His emphasis on serving the customer and putting their needs first. N.B., Goldman Sachs’ customers are not you and I with our little savings account in a credit union or our 401K. Goldman Sachs’ clients are the 1%, by and large: the average balance in an account there is over $18 million. Now, it might be fashionable to enjoy the prospect of the 1% getting reamed by their own bankers, but this corporate culture is obviously infectious and communicative, and the results affect us all. But no matter: Bloomberg thinks Smith is being unfair and unkind to his former employer, and they are prepared to step in and defend the beleaguered institution.
What is delightful and refreshing to see is the response of Bloomberg’s readers. Phil ad wrote,
Wow what a vicious and childish article this is! Obviously the writer of this is angry with mister Smith and does not understand what it means to make money in a responsible, reasonable fashion.
Pathetic. An entire editorial attacking a straw man of your own creation—namely that Smith was against making money. It is entirely possible—desirable even—to make money whilst acting ethically and regarding the interests of one’s clients as paramount.
And indigo144 wrote,
This article is as honest as a GS sales pitch — no wonder no Bloomerg editor would put his/her name to it. Mr. Smith pointed out that there is a difference between making money for clients and making money off clients. Apparently Bloomberg shares GS view that the former is a quaint notion for the very naive.