Well this seems sure to be the buzzy Wall Street story of the day.It’s also sure to be another PR nightmare for Goldman Sachs.
Greg Smith, a Goldman Sachs executive director and head of the firm’s United States equity derivatives business in Europe, the Middle East and Africa, has announced he’s quitting the firm in a most public manner: He did so by writing a long NYT op-ed denouncing what the firm has become.
After nearly 12 years, he says, the place is as “toxic and destructive” as he’s ever seen it.
He slams the culture under Lloyd Blankfein, saying that the firm puts making money over clients, and that he can no longer in good conscience stay there and recruit people.
To put the problem in the simplest terms, the interests of the client continue to be sidelined in the way the firm operates and thinks about making money. Goldman Sachs is one of the world’s largest and most important investment banks and it is too integral to global finance to continue to act this way. The firm has veered so far from the place I joined right out of college that I can no longer in good conscience say that I identify with what it stands for.
He says he was once proud of working for Goldman, but not now…
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.
What really galls him is the extent to which the sole focus is making money off clients, rather than servicing them:
These days, the most common question I get from junior analysts about derivatives is, “How much money did we make off the client?” It bothers me every time I hear it, because it is a clear reflection of what they are observing from their leaders about the way they should behave. Now project 10 years into the future: You don’t have to be a rocket scientist to figure out that the junior analyst sitting quietly in the corner of the room hearing about “Muppets,” “ripping eyeballs out” and “getting paid” doesn’t exactly turn into a model citizen.
I hope this can be a wake-up call to the board of directors. Make the client the focal point of your business again. Without clients you will not make money. In fact, you will not exist. Weed out the morally bankrupt people, no matter how much money they make for the firm. And get the culture right again, so people want to work here for the right reasons. People who care only about making money will not sustain this firm — or the trust of its clients — for very much longer.
Meanwhile, as evidence that this is going to be yet another major public relations headache for the firm, the term “Goldman Sachs” is already trending on Twitter.
UPDATE II: Goldman fights back >