Greg Smith’s New York Times exposé of his last days at Goldman Sachs tells a disturbing story of the once-venerable firm’s modern-day culture. In good conscience, Mr. Smith could not remain with a firm whose leaders, he alleges, possess none.
In his Op-Ed he suggests that today’s junior analysts’ indoctrination by grossly-unethical superiors will surely mold them into greedy, “muppet”-exploiters, out for nothing other than making money off their clients. I happen to disagree. I believe that by the age one might be granted an interview at Goldman, the putty’s already dry. I don’t believe you can un-teach morality.
Take Mr. Smith for example; he, by all appearances, is a person of high moral character—and I suspect that’s who he was as a 22 year-old neophyte to the ways of Wall Street. But should we assume, as he does, that had his indoctrination subjected him to the utter disdain for clients he describes, that today he’d be the one referring to them as “muppets’, and talking about “ripping eyeballs out” and “getting paid”? I suspect not. I suspect he’d either be happily employed in a different industry, or perhaps blowing the whistle on some other corruption (maybe catching his green energy firm boss planning his six-digit taxpayer-funded bonus and the firm’s bankruptcy both at the same time). I therefore wouldn’t worry about today’s youngsters stepping onto Goldman’s ladder. If they’re of good character, and they find their instructors aren’t, they’ll either step off, or aspire to one-day replace the characters who currently occupy the higher rungs.
As for the junior analysts he refers to who seem concerned only with how much money they “make off the client”, I would argue that they’re the types, going in, who are drawn to the glitz, greed, and grasp on Washington (the connections are too numerous to list here) of the Goldman of today. The highly ethical prospects, like the Mr. Smith of 13 years ago, are no doubt finding their way to other firms, if not other industries, where they can utilize their talents to the benefit of the customer while earning their fortunes and sleeping like babies in the process.
As for Goldman Sachs, it has a huge PR problem. And CEO Lloyd Blankfein’s first attempt at damage control, in my estimation, was a miserable failure. His response to Mr. Smith’s allegations was little more than a simple “that’s not how we see things”. If Mr. Blankfein is to at least band-aid his firm’s now-shattered (was already tattered) reputation, he’ll be back [soon] with something like the following:
“We are profoundly troubled by Mr. Smith’s accusations, and we will perform a thorough and intense internal investigation. We will begin by looking into all of the firm’s trading practices to determine if indeed our traders are abusing our clients. And if that is the case, upon discovery, we will terminate the abusers and take measures to make certain that that sort of thing never again occurs at Goldman Sachs. If we find that any of our personnel have ever once uttered the insults Mr. Smith describes, they will be fired immediately as well. At the conclusion of our investigation, and consequent actions, I will give serious consideration (as will the board I suspect) to whether I should remain as CEO. Clearly, if Mr. Smith is right, the legitimacy of my leadership should be called into serious question.”
Don’t hold your breath…
One last point: While you can’t teach morality, the system, if we allow it, can indeed teach prudence. Without the bailouts of the last few decades, the likes of those who’d otherwise seek an easy street to riches and political influence, would’ve learned in U.S. Modern History 101 that outright greed leads to outright destruction. But, alas, when it comes to [supposedly] systemically important and politically influential employers, they’ve been taught that ours is a unique profit and loss system. One of privatized profits and socialized losses.
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