Greg Smith, a Goldman Sachs director in London has resigned, and in doing so published this letter detailing his grievances, including the charge the firm is 'morally bankrupt.' It will be talked about for years to come.
File photo, Goldman Sachs building. (photo: Brendan Mcdermid/Reuters)
Why I Am Leaving Goldman Sachs
14 March 12
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oday is my last day at Goldman Sachs. After almost 12 years at the firm - first as a summer intern while at Stanford, then in New York for 10 years, and now in London - I believe I have worked here long enough to understand the trajectory of its culture, its people and its identity. And I can honestly say that the environment now is as toxic and destructive as I have ever seen it.
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.
It might sound surprising to a skeptical public, but culture was always a vital part of Goldman Sachs's success. It revolved around teamwork, integrity, a spirit of humility, and always doing right by our clients. The culture was the secret sauce that made this place great and allowed us to earn our clients' trust for 143 years. It wasn't just about making money; this alone will not sustain a firm for so long. It had something to do with pride and belief in the organization. I am sad to say that I look around today and see virtually no trace of the culture that made me love working for this firm for many years. I no longer have the pride, or the belief.
But this was not always the case. For more than a decade I recruited and mentored candidates through our grueling interview process. I was selected as one of 10 people (out of a firm of more than 30,000) to appear on our recruiting video, which is played on every college campus we visit around the world. In 2006 I managed the summer intern program in sales and trading in New York for the 80 college students who made the cut, out of the thousands who applied.
I knew it was time to leave when I realized I could no longer look students in the eye and tell them what a great place this was to work.
When the history books are written about Goldman Sachs, they may reflect that the current chief executive officer, Lloyd C. Blankfein, and the president, Gary D. Cohn, lost hold of the firm's culture on their watch. I truly believe that this decline in the firm's moral fiber represents the single most serious threat to its long-run survival.
Over the course of my career I have had the privilege of advising two of the largest hedge funds on the planet, five of the largest asset managers in the United States, and three of the most prominent sovereign wealth funds in the Middle East and Asia. My clients have a total asset base of more than a trillion dollars. 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. This view is becoming increasingly unpopular at Goldman Sachs. Another sign that it was time to leave.
How did we get here? The firm changed the way it thought about leadership. 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 ax murderer) you will be promoted into a position of influence.
What are three quick ways to become a leader? a) Execute on the firm's "axes," which is Goldman-speak for persuading your clients to invest in the stocks or other products that we are trying to get rid of because they are not seen as having a lot of potential profit. b) "Hunt Elephants." In English: get your clients - some of whom are sophisticated, and some of whom aren't - to trade whatever will bring the biggest profit to Goldman. Call me old-fashioned, but I don't like selling my clients a product that is wrong for them. c) Find yourself sitting in a seat where your job is to trade any illiquid, opaque product with a three-letter acronym.
Today, many of these leaders display a Goldman Sachs culture quotient of exactly zero percent. 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 of them. If you were an alien from Mars and sat in on one of these meetings, you would believe that a client's success or progress was not part of the thought process at all.
It makes me ill how callously people talk about ripping their clients off. Over the last 12 months I have seen five different managing directors refer to their own clients as "muppets," sometimes over internal e-mail. Even after the S.E.C., Fabulous Fab, Abacus, God's work, Carl Levin, Vampire Squids? No humility? I mean, come on. Integrity? It is eroding. I don't know of any illegal behavior, but will people push the envelope and pitch lucrative and complicated products to clients even if they are not the simplest investments or the ones most directly aligned with the client's goals? Absolutely. Every day, in fact.
It astounds me how little senior management gets a basic truth: If clients don't trust you they will eventually stop doing business with you. It doesn't matter how smart you are.
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.
When I was a first-year analyst I didn't know where the bathroom was, or how to tie my shoelaces. I was taught to be concerned with learning the ropes, finding out what a derivative was, understanding finance, getting to know our clients and what motivated them, learning how they defined success and what we could do to help them get there.
My proudest moments in life - getting a full scholarship to go from South Africa to Stanford University, being selected as a Rhodes Scholar national finalist, winning a bronze medal for table tennis at the Maccabiah Games in Israel, known as the Jewish Olympics - have all come through hard work, with no shortcuts. Goldman Sachs today has become too much about shortcuts and not enough about achievement. It just doesn't feel right to me anymore.
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.
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And to the fat guy in the steam room?
Yet, for years small "neutral countries" hidden money, aka part of the national treasure, with no consequence. I'm sure it has been this way, because off-shore accounts smell of unaccountable white-collar crime.
I hope Senator Sanders' bill gets traction, but I'm not hopeful.
We saw how Occupy was brutally beat back and smeared in over 25 cities.. So, the Congress? Senate? Right now?
But, this pure corruption of a 2 tiered tax system runs much deeper than just revenue.
These colonialist, Trans National Corps will never truly invest in a Country they've already colonized unless they are forced, (tariffs & taxes are much higher) and that ain't gonna be happening any time soon..
Or, we can at least start chipping away at some of their monopolistic domination tools to create some kinda competition..
If, the People continue to welfare all their domestic labor costs plus some Chump Change left over to further buy / bribe their Political Stooges.. Then, who in the heck will ever be able compete with that? This, just has to stop.. Now!
I never thought I would say this.. "Uhm, maybe, we should have Bernie speaking to the WTO for us, too.." lol.!
To all Americans, We still have a voice, it is our wallet our paycheck that they hear, not the words on this site or those like it. Its is accounts closed, credit cards canceled. Find out the Companies that steal from us (US) and refuse to do business with them, refuse to invest in them, local banks and credit unions can handle the banking, local stores the goods we buy at Walmart and if no alternative exist such as gasoline let's do all we can to buy less. Sure pound on your congressman and Senators but in the end they will do just like BOA they will side with the biggest campaign donors.
If you've been paying attention you would know he has done that numerous times.
Yes, and so do we!
This old canard is so painfully obviously - and historically - baseless, I can only wonder why it is still knee-jerk reaction offered with all evidence to the contrary.
It sounds to me like you do not realize that the taxes are the LOWEST they have been since the presidency of EISENHOWER???
Look it up. It is true, and there are many, that can certainly afford to pay more tax. The people,whose MONEY are making MORE MONEY!!
They are certainly not working hard and earning their money by their own sweat, unlike the poor and the middle class.
Doc E is who you should have been addressing. Jon was pointing out the absurdity of Doc E's comment about lowering taxes.
Thank you for pointing out my mistake. I didn't pay enough attention to the quotation mark.
I apologize Jon, please excuse the mistake.
How you earned a living was none of the business of the political class. For that matter, your bank account could be under a false name and absolutely no one cared.
This was the world of a mere 100 years ago in the United States. That's why it was called the "land for the free."
Back then, all federal revenue -- tiny by today's standards -- came from a tax on imported goods.
I think Bernie Sanders,...who I admire...
Has constituents, who are more sensible, ....and I really think, are more... intelligent, as opposed to many of the deep red southern states or purple states.
Consequently, he is not in need of all that corporate money, and can be more honest and forceful.
Before you hit me over the head, for my remark about the red states.....Ther e's LOUIS GOMERT, an idiot who is re-elected time after time and another idiot in Georgia, Brown, . He is unbelievable, and now is considering running for Saxby Chamblis' seat I think. The voters who send these guys to congress are NOT bright.
Follow Iceland's lead.
Spank the Banks
We are weenies.
I sure wish Bernie Sanders a lot of luck.
He is the most courageous person in Congress. And we all need him.
It's no wonder corporations have these welfare plans, they own the best congressmen money can buy. Get rid of the Republicans and we can get the corporations paying taxes again and also get our jobs back.
People have a right to demand an end to it and that corporate profiteers and vulture capitalists pay their share as Bernie states.
This theory says if you feed high expectations, in our case "The American Dream," to the lower and middle classes, and then snatch it away from them, you fuel the disappointment (a very strong emotion, like the one the early Americans felt when they felt they were British "citizens" and the English passed the Stamp Act and the Tea Tax without their approval, in effect telling them they were not citizens and had no say in how they were going to be treated.)and that emotion can lead as in America, France, and Russia, the Arab Spring,to giant and bloody revolutions.
FDR knew this, and in order to save capitalists from revolution from an American Communist Party,he created the two (other)great socialist programs we have, Social Security, and Medicare.
He also created huge job programs to help the people suffering from the starvation and everything else during the depression. He never got the love from the rich in our country. They stupidly cursed him instead. He saved their butts, and they still talk about him as the anti-Christ and cash their SSI checks monthly...,
I thought I was correct, but to make doubly sure I Googled it, and I AM CORRECT.
It WAS Lyndon Johnson, and congress during his term in office, which started Medicare and medicaid. Look it up yourself
FDR would have gotten us single payer or at least the public option.But that would have pissed off the drug companies and huge insurance companies that give millions every year to pay off Washington. In the first month of the first term, the drug companies made a deal with the president and gave him eighty billion towards Obamacare over ten years. Eight billion a year. They will make three trillion in that time. Use the math people.
Note how the Drug store chains fix prices because the job to stop them went from D.C. to the states somewhere along the line from the Sherman Anti Trust Act. I never see Bernie talk about that one, as it too affects millions of people on Medicare who can't afford their drugs.(My daughter lives in England because of that system. Her husband has MS.)
Single payer, and free college education laws would be enough to stop a revolution here. In the next four years, our president better get on the stick, both for the "forty seven percent" and for the World because of climate change. The World is watching, and thankfully, so is Senator Sanders.
Bernie, please start talking about the drug store heist of the public. Thanks in advance.
I think you give FDR too much credit. He did NOT institute Medicare.....Ly ndon Johnson did. Social Security was a big step in helping the less well off, and really a hated step by the majority of the wealthy. He would never have been able to implement medicare ....roo.
I have dealt with the healthcare crisis firsthand. I saw firsthand how an uninsured relative of mine put off care until it was too late, dying of cancer. Now I can't say that having insurance would have saved her--there are those with great insurance whose cancers get detected who still die--but she would have had more options. Obamacare and the state exchanges would have helped her and perhaps might have saved her life.
Obamacare is probably the best healthcare reform we will see in near to midterm unfortunately. The problem is that there is a significant minority, if not a majority, of Americans who honestly believes that "only those on welfare" don't have access to health insurance. They believe that, were it not for their decision to "have cell phones, cable TV, and Internet", they could afford insurance. Alternatively there are tons of Americans, including many liberals, who believe that you can show up at the emergency room, get care, and not have to pay. More in next post.
I literally have had the same argument over and over again with many friends, including many of whom who happen to be Democrats and liberals, that, no the emergency room isn't free. Now perhaps they don't collect from everyone who shows up there, but they damn sure will send collection agencies and garnish paychecks. Indeed a New York Times article I read about a year mentioned how one hospital in MN hired a contractor to hound patients to get money at each step of the way. This company even embedded staff with doctors.
And then yet you have others who are resistant to any form of national healthcare because "they don't want to lose the right to pick their own doctor". The irony is that insurance companies often decide which doctors they'll visit. But they fear having to report to some large, scary, Soviet-Style building staffed with unfriendly bureaucrats whose only mission in life is to prevent them from seeing their doctor and getting the care they need. They fear having to wait months on end for care, even though many doctors here in the US don't have openings for several weeks.
Alternatively you still have others who believe that national healthcare will result in "higher taxes for a social welfare benefit program that will reward and enable pathological/ir responsible behavior". More in next post.
In their fantasies they envision their taxes supporting a welfare program where the beneficiaries will be "those people"--i.e., the mythical uneducated, unemployed welfare queen with five kids getting all these checks every month--and they will have to wait in line while said welfare queen rushes to the front. They don't think they will get good care and they think their tax dollars will promote/reward/ enable irresponsible behavior.
The tragedy is that most Americans who have benefits through work will never see the flipside of the US healthcare system. They don't believe that there are those who want coverage, but can't afford either due to low salary, their employees not offering it, or having pre-existing conditions. In their mind it's "only the lazy and shiftless" who don't have insurance.
For those reasons we are not likely to get single-payer or national healthcare anytime soon. There are too many Americans opposed to it. Against this backdrop that President Obama was able to get ANY healthcare bill passed is a miracle.
Obamacare was hardly a panacea and it doesn't come close to solving the healthcare crisis. But it does provide some help to some people and it is a step forward. I'll glad take it over having nothing at all.
Thank you very much for setting it straight.
You are so right about the attitude of a great many of our country men and women.
Obamacare certainly is far from perfect, BUT it is the needed START, I am sure it will be improved upon as time goes on, and now a lot of people with preexisting conditions can get help.
Imagine,.... giving birth, means you have a preexisting condition?? And if you had skin problems when you were a teenager and saw a dermatologist.. ..same thing.
As part of his 2008 campaign Obama spoke of this problem. Americans generally don't seem to be willing to do much about it.
In the 1950's talk of the rich included Swiss bank accounts. As emerging middle class evangelicals moved to the right there were dreams of Mercedes and Swiss bank accounts. This may speek to the lack of will to address tax cheating. Trouble is, middle class Americans don't have Swiss or Cayman Island accounts and their dream is still worth letting the rich get off scott free. The thinking is irrational but serves the wealthy very very well doesn't it?
How uncharacteristi c of US Senators!
Here are the primary reasons for socialism: 1) the grotesque bipartisan political irresponsibilit y in Washington, D. C.; 2) the alarmingly obscene criminal behavior of US corporate giants; 3) the predictable political & moral lethargy of the US voter.
Why is there even a question about whether or not we have the radical collapse of education in the US?
Bernie, please start a Twelve Step Program for elected officials who love re-election more than America.
1. Educate voters on which elected officials truly love America by showing them the voting records while in office.
2. Get the voters to the polls on election days.
and.....live in a blue state
I read this on the back pages of the NYT.....
This was an immediate tip to me that he intended to get that mess,instead of single payer.And perhaps an immediate change once the republicans get the white house?
The question is: Did he figure he could never press for single payer which was really needed to help us get out of our economic mess by raising taxes to pay for single payer? Did he realize he couldn't pass anything rational like that with a rightwing house?
Or did he intend to help all the corporations involved in that important part of our economy, the healthcare business?
My thinking, or intuition is that the mayor of Chicago had something to do with that decision.
I believe that Sanders and a lot of you out there had the same thoughts in mind. I felt it was a great moment in our history and it was a huge mistake by the government.
I also think it led to the type of feelings and thoughts I have read online ever since. There seems to be a big lack of trust. And I do not blame anyone who feels that way. It is dangerous, and it is getting a pushback which is making matters worse. Obama has to make a move to have us trust him again. Right now, I don't. I wish I did.
That being said I don't agree with how Obama pushed the bill. I think he wasted way too much time trying to get Republican support when it was patently clear to even the most uninformed observer that the GOP was never going to agree to support any bill, even the supposedly "moderate" Olympia Snowe. I think he failed miserably in the messaging of the bill and compromised too much way too early. He could have pushed for single-payer and the public option, even if he (privately) knew Obamacare was the best that he could get.
Obama and the Democrats lost the messaging war. I remember how, right after the inauguration, Patients United Now and Conservatives for Patients Rights were running ads "warning against a government takeover of healthcare". I remember how the media was talking about "death panels" and so forth.
Continued in next post. . . .
By May 2009 it was clear to anyone that the bill was in trouble. The messaging war was steadily being lost. And then, when the summer finally arrived, it was the Tea Party who stormed all the townhall meetings. Like on most other policy issues the right was out there early getting their message, shaped the terms of the debate, and were able to put the pro-reform side on the defensive.
But the bottom line here is that national healthcare, the public option, or single-payer never had the votes. The votes were NEVER going to be there. As I wrote in a post above too many Americans believe that the uninsured lack coverage "because they are lazy and irresponsible". Or alternatively they fear "losing the right to choose their own doctor". Yet others believe that you can show up at the emergency room, get care, and not have to pay.
Until these attitudes change you are never going to see single-payer or the public option in the US. That Obamacare passed in the political climate at the time is a miracle.
x dane, thanks for the correction. there are two major bills he signed and i can't think of the other. fdic was also important, etc....
It is because he is not beholden to corporations or wealthy individuals.
Vermont has intelligent voters who vote for him.
He does not need to go begging for money to run a campaign, and consequently, he doesn't owe anybody but his constituents.
PUBLICLY funded elections is the answer.
all everyone has to do to alleviate the crap that is spread about socialized medicine is speak to a person from canada or england.
yes there is waiting for "elective" surgery, but emergancy stuff is done at once without charge. my son-in-law is alive because he lives in europe, england mostly, and spain now to warm up. he also used france's system when he owned a hotel in Poe. He has MS and needs about a thousand bucks or more of meds right now as he came out of remission. both england and france agreed to give him the meds he needs even though it is very expensive. i play bridge with canadians and every one of them would not trade their system of national health with ours, taxes or no taxes.
On economics, war and civil liberties the Obama Administration very much resembles the Bush Administration.
My grandfather fought such folks in WWII.
Many, since, have warned of 'Fascism with a Democratic Face.'
How ironic that that face belongs to Barry Obama.
Even Fuedal landowners realized the serfs had to win sometimes in order for them to keep their lands producing, but our rich believe they are entitled to everything, including not paying for living in a country where they can become super rich, but believe those without jobs, education or homes are miscreants of a welfare system. We need 300 Bernies to take over from our current government, because just one crying in the wind won't do.