Wednesday, March 14, 2012

Goldman Sachs director quits 'morally bankrupt' Wall Street bank

Goldman Sachs director quits 'morally bankrupt' Wall Street bank:
Greg Smith resigns as executive director of Goldman's European equity derivatives business after devastating attack
A Goldman Sachs director in London has resigned after publishing a devastating open letter accusing senior staff of being "morally bankrupt" and bent on extracting maximum fees from clients by offloading unsuitable investment products.
Greg Smith, who has left his post as executive director of the firm's equity derivatives business in Europe, claimed that chief executive Lloyd Blankfein and president Gary Cohn have "lost hold of the firm's culture on their watch". He added that "this decline in the firm's moral fibre represents the single most serious threat to its long-run survival"..
Smith's charges, which were swiftly denied by the bank, were published in Wednesday's New York Times and raised questions about the firm's relationship with existing clients, whom Smith claimed were referred to as "muppets".
Lord Oakeshott, the Liberal Democrat peer and his party's former Treasury spokesman in the Lords, said the matter raised questions about any relationship between the UK government and Goldman.
Smith, who joined Goldman as a summer intern and worked at the firm for 12 years, first in New York and then in London, claimed managing directors made their remarks about "muppets" in internal email.
"I attend derivatives sales meetings where not one single minute is spent asking questions about how we can help clients. It's purely about how we can make the most possible money off them."
Selected as one of 10 people, out of a firm of 30,000, to appear in a Goldman recruiting video which is played on college campuses around the world, Smith has hired and mentored new recruits and managed a summer intern programme for the bank.
"I knew it was time to leave when I realised I could no longer look students in the eye and tell them what a great place this was to work," he wrote.
He said junior analysts are absorbing a culture in which the most important question is "how much money did we make off the client?", and that hearing talk of "muppets," "ripping eyeballs out" and "getting paid" will not turn them into "model citizens".
"Leadership used to be about ideas, setting an example and doing the right thing. Today, if you make enough money for the firm (and are not currently an axe murderer) you will be promoted to a position of influence."
In response, Goldman Sachs denied that Smith was giving an accurate view of life at the company.
"We disagree with the views expressed, which we don't think reflect the way we run our business. 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," the bank said.
Conscience and Wall Street banking don't mix, apparently. I'm not sure how this person got as far as they did if they had a conscience all this time, but, hey, better late than never.
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