Why The Hottest Attack On Greg Smith Is Total Nonsense

Photo: Flickr / trenttsd

The hottest response to Greg Smith (the Goldman guy who quit via NYT op-ed) is this unsigned editorial from Bloomberg View.The title is: Yes, Mr. Smith, Goldman Sachs Is All About Making Money, and the gist is: Greg Smith was obviously a naive rube who thought he was working at Save The Children or something, rather than Goldman.
Ben White at Morning Money says practically everyone at Goldman forwarded it to him.

We heard this attitude expressed a bunch of times yesterday. How could Smith be shocked to find gambling in the gin joint? Of course, Goldman is about making money. They’re GOLDMAN.

But this response misses the point.

First of all, every business exists to make money. Wall Street firms deal directly in the business of making money via money, but that doesn’t mean they’re unique in the fact that they exist to make a profit.

But more importantly, there can be something in between Save The Children and The Mafia. Smith didn’t compare Goldman to the Mafia, but he was uncomfortable with the way the firm did business.

You can favour making money, while also thinking that the tactics being used to make that money are long-term damaging to the firm.

What’s wrong with thinking that?

The fact of the matter is that Smith isn’t alone in his assessment of the firm. Another ex-Goldman trader we talked to expressed the same point, that when Lloyd Blankfein came in, the “long-term greedy” approach went out the window, and that traders started taking the attitude of making the most possible money on each trade, rather than encouraging clients to do what’s best, even if that meant the trades would be less profitable in the short term.

Again, there’s nothing wrong with objecting to this change (if in fact it’s real).

Is it a little rich that Smith was there for 12 years, and only started complaining now? Sure. Could there have been sour grapes that he didn’t make MD after 12 years. You bet. There are plenty of holes to be poked in his op-ed.

But simply pointing out that Goldman is in the business to make money is missing the point.

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