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Disgruntled Goldmanite

Today, The New York Times printed an op-ed called "Why I Am Leaving Goldman Sachs."  I don't know how into investment banking you all are.  It's pretty dry stuff, I think, but I also feel a bit forced to take an interest, what with investment banks nearly destroying the world and all.  If we all lived in a comic book we'd have to take an interest in Lex Luthor too, even if he can drone on at times.

And investment bankers do drone on, especially this Greg Smith, who quit his job today.  The culture of the firm changed, he says.  I take serious issue with that.  Goldman Sachs, like all large investment banks, has had conflicts of interest forever.  It's by design.  The bank both serves customers and trades its own book.  Goldman's been dealing with these issues since the 1920s.  If you want a quick history of Goldman's major conflicts, I outlined some of them in this review of William Cohan's book from last May.

Greg Smith worked at Goldman for 12 years, meaning that he started at the end of the dotcom crash, when it was pretty common knowledge that Wall Street analysts were not looking out for at least some of their clients.  His whining missive in the Times just seems a little late to me.  As in, "I made my money and now I'm getting out," late.  By the way, the rumor being spread about Smith is that he wasn't that good at his job and never made more than $750,000 in a year. He's rich enough, if not by Goldman standards, certainly by the standards of most.

I've already gone on too long about the banker and his blind eye.  What I really want to know is what The New York Times is thinking.  Surely thousands of New Yorkers quit their jobs every day, for better reasons than Smith gave.  Certainly, thousands of workers every day are expected to make ethical or other compromises in order to do their jobs.  But they never get a voice.  Today the Web was full of joke resignation letters ("Why I'm Leaving Seaworld, from Slate; Why I'm Leaving the Empire, by Darth Vader") but it is annoying that the Times would pretty much never publish a disgruntled goodbye from a teacher leaving the public school system or an MTA employee angry that the union has made too many concessions in the contract negotiations.

The Times should at least consider that it's sending a terrible message by publishing this-- that the travails and ethical dillemas of a Wall Street derivative banker are somehow more important than the same problems when faced by anybody else.  Maybe instead of real estate next to Thomas Friedman, our former Goldman banker should fire up the Wordpress like everybody else.

Hey, Smith... go blog it, buddy.

 

 

Kottke blogs about this and ex-employees of Google and Yahoo:

The Google I was passionate about was a technology company that empowered its employees to innovate. The Google I left was an advertising company with a single corporate-mandated focus.

For years, Yahoo was mostly harmless. Management foibles and executive shuffles only hurt shareholders and employee morale. But in the last few years, the company's incompetence has begun to hurt the rest of us. First, with the wholesale destruction of internet history, and now by attacking younger, smarter companies.

Also aa pointed out a parody of the Smith letter:

The Empire is one of the galaxy's largest and most important oppressive regimes and it is too integral to galactic murder to continue to act this way. The firm has veered so far from the place I joined right out of Yoda College that I can no longer in good conscience point menacingly and say that I identify with what it stands for.

What I really want to know is what The New York Times is thinking.
Where have you been the past two years? Goldman bankers are America's newest supervillains--corruptors of politics, pillagers of the economy, impoverishers of the working man. Even the dullest bean-counting drones in Goldman's deepest basements have become instant celebrities, or rather anti-celebrities.
 
Check out NYT's Most Popular page. Greg Smith, once a humdrum financier and guaranteed party-killer, has swept the awards: Most E-Mailed, Most Viewed, Most Blogged. The only thing that prevented his column from burying nytimes.com's servers under a torrent of web traffic was its intrinsic boringness. If Smith weren't such a weenie, he'd already be on all the talk shows, and the big wig news anchors would be hammering down his door for an exclusive.
 
The fault, dear Destor, is not in our Times but in ourselves.

 

has swept the awards: Most E-Mailed, Most Viewed, Most Blogged.

The significant other of my misspent youth would have called that winning the trifecta. Are we at least willing to admit that NYT editors in this case had a bit better of a sense about what might sell copy than some folks here?

The only thing that prevented his column from burying nytimes.com's servers under a torrent of web traffic was its intrinsic boringness. If Smith weren't such a weenie, he'd already be on all the talk shows, and the big wig news anchors would be hammering down his door for an exclusive.

I dunno, I was scanning the 500+ comments on this article

Public Rebuke of Culture at Goldman Opens Debate

which, while it's located in the "Dealbook" section on the website,  was the two-column headline of the dead-tree edition's front page today, and there seems to be an awful lot of people calling him a hee-ro, saying stuff along the lines of Momma let your kids grow up to be Greg Smith's, who was willing to reject million dollar stock options for integrity.

Ever think about what made a majority of the American public say they supported OWS' themes at its start? I think it's dangerous to believe it was more about wanting a "revolution" than it was about getting some people with integrity in Washington and in leading roles in American business. As a side note, I think this gets at the core of Romney's problem--at first glance, he's got that upstanding honorable Mormon businessman meme he's selling, but then people look under the hood,  and they see another elite corporate raider, all integrity talk , no integrity walk.

Smith's op-ed is still winning the trifecta over at the Times, BTW; I just checked, still "most popular" in all three categories. And the Dealbook  article I linked to is currently #2 on "Most Viewed."

I think that Mr. Smith (completely unrelated to me!) has seen Jerry Maguire too many times.  I understand his wife was quoted as saying, "He had me at unscrupulous excess."

My, you guys are so worldly and clever and all.

Yes, the reason for all the parodies is because people know that the things Smith is complaining about are not primarily due to any kind of sea change at Goldman, but are rife from one end of the sick system of contemporary American capitalism to the other.

So what exactly is gained by jumping on the "Hey Smith, grow a pair and quit yer whining!" bandwagon?  Or by joining in the whisper campaigns and mocking of Smith's alleged under-performance?  Or by suggesting that progressive antipathy big banks is oh so plebian and passe?

As far as I'm concerned, anything that hurts Goldman's reputation and causes consternation among its management and stockholders is to be celebrated.  Maybe something will happen tomorrow to pummel its stock prices again.  I can't wait.

Of course, licking the anus of established power while making jaded and ironic jokes about it is what Dagblog is all about these days.  That and tennis I guess.

I am SO not a liberal anymore.

So, you get to feel outraged at those of us who find this guy's bloviating less than sincere, simply because he is attacking an easily agreed upon target? 

Goldman Sachs? Feh.  This guy?  Feh.  Why do you insist I prefer one Feh over the other Feh?  My disregard for that Mr. Smith makes no statement as to my feelings towards Goldman Sachs.  Perhaps one can find this guy a jerk AND find Goldman Sachs an evil loathsome organization. Would that be okay with you?   

What's more troubling is that your political philosophy appears to be at the mercy of tennis and ironic jokes.  I can only imagine that my haikus would turn you into a full-fledged, card-carrying Conservative. So, whatever you do, don't read them.  

Sorry, but I am SO not a serious stick-in-the-mud anymore.

"What's more troubling is that your political philosophy appears to be at the mercy of tennis and ironic jokes."

Hey, David Foster Wallace made quite a career that way!

Ok, this comment is freaking funny. I'll give you that.  

On behalf of my comrades at dagblog, I humbly apologize. The People are weak, and the anus is very tempting.

I have tried to make comrade Donal stop with the tennis, but he is incurably bourgeois. We may have to take sterner measures.

Tell me, comrade, does the Revolution prohibit all humor or only degenerate jokes that stink of jade and irony?

Yeah, I know.  Modern liberalism is all about laughing.  It's all one big joke.    Stewart, Colbert.   It's like the character Joker in Full Metal Jacket.  We can kill, rob and exploit for the empire - or at least passively accept killing, robbing and exploiting -  as long as we mock the murder with the appropriate degree of ironical distance    I need to get my irony on, right?

Well, sorry.   For me ... it's ... just ... not ... funny ... any ... more.

As soon as the piece appeared it was obvious Goldman wouldn't respond with a frontal assault, but would begin the whisper campaigns, the derision, the lampooning, the back-channel media gossip.  They never had anything to worry about, since it was obvious that too-cool-for-school hipster liberals would carry their water for them, just like they've been carrying water for Wall Street since 2009.

 

Sorry your life is so miserable, Dan.  Thanks for making me feel small and insignificant and completely wrong for wanting to make people laugh.  That you feel I am somehow part of Goldman Sachs whisper campaign against this guy is just nuts. Yeah, their evil  influence is so pervasive that they've hired me to undermine their critics.  Jeez.

Are you really going to be this throw up your hands depressed about the world all the way through the 2012 election or are you going to lighten the f*ck up at some point?

Perhaps not everyone sees the world the way you do, Dan. Perhaps everyone reacts to events differently. Why do you need to take me to task for how I see the world and how I react to it? Why do you get to feel smug and superior with your "I'm a serious person" attitude?  Do you think because I make light of some things, that I'm not as relevant and don't think about the world as seriously as you?  Do you really think you're more a person of substance because you've can't take all the jokes and lack of substance being offered here?  Well you're wrong.

 

 

<i>Thanks for making me feel small and insignificant and completely wrong for wanting to make people laugh.</i>

Oh, boo hoo.  You can mock people for sport yourself all you want, but then don't go looking for a hug if your own feelings get hurt.

Anyway, my comment appeared below Genghis's original post, which now appears to be gone.

I have no intentions at this time of lightening the fuck up.  But who knows.  Maybe something will tickle my funny bone.

Sorry, Genghis's post is still there.

"Maybe something will tickle my funny bone."

 

Maybe this will do it.

I do think it is news, so to that extent I disagree with Destor about the Times carrying the story.

But while I have no doubt that G-S is every bit as bad as Smith describes, I felt the same way as Destor about Smith while I was reading it—and I found Smith's piece before I read Destor's—that G-S didn't just suddenly get worse while Smith was there.

Perhaps Smith suddenly acquired more stringent morals, but in any case he chose to ignore what was happening until recently. Had he admitted that, it would have been a stronger piece. Instead he comes off trying to sound like the only good guy at Goldman-Sachs, which makes him an easy target for parody.

Dan... I'm not going to go with the standard that, "If it's bad for Goldman right here and now, it's fine by me."  I think that taking Smith's account at face value is harmful to our cause. 

If you believe Smith's telling then you have to believe that Goldman was a historically good firm that's going through a rough patch.  You would then conclude that it could be fixed by changing CEOs and crafting a "Don't Be Evil," mission statement.

The truth is that Goldman's conflicts have been part of its business since at east the 1920s and that they were certainly there (and being written about) 12 years ago when Smith started his tenure there.  What you conclude from that is that Goldman never should have been allowed to develop the influence that it has now and that something far more structural needs to change, not just regarding Goldman but regarding the whole industry.

You're accusing me of being duped by whisper campaigns and of unhealthy cynicism.  I'm going to have to yell #shotsfired here and accuse you of playing right into Goldman's hands by making Goldman's issues seem more like a sign of the times than something endemic to the bank's business model.

I didn't take his account at face value.  I said that part of the reason people were lampooning him is because they instinctively realize that the problem is bigger than just a few bad years of moral decline at Goldman Sachs.

But basically, Smith's letter earned him a day of character assassination, much of it at the hands of liberal pundits who can never resist a round of one-upsmanship in the game of clever comments.

Dan's right. 

This is cynical humor that doesn't work.  NYtimes is right to post, and should post loudly.   

Don't get me wrong I have great respect for what you guys are trying to do here at Dag, but this fails. Those fuckers raped us, and are raping us. Personally I know way, way too many folks who are long term unemployed to find this shit at all funny. Granted my spoiled ass life took me recently to Portugal, but there I saw a country rapidly sliding into developing status due to trying to hold the Euro. Seeing someone admit that they are greedy mother fuckers who pillage and don't give a shit is important to me.

Truth lost, and whatever notice truth occasionally gets gives me a little hope that not all is lost. 

The fact that all us smartys get that this is how the world works doesn't make me feel good--and I certainly don't want to laugh about it.  In fact it makes me nauseous--and then ignore sites like this. Which is exactly the opposite of what you have worked hard to not do.  

I know times blow. But this shit isn't funny, even if well crafted. In fact it breaks my idealistic heart. Your's too I suspect. 

Frankly I look forward to when you guys figure out how to tell us stupid idealistic liberals to suck it up and get behind Obama, defend what positive health care reform we have, and attack Romney--and the 1%--in the name of populist tax reform. I'll admit I don't know how to do that in an entertaining way.  But cynical humor is not the answer  

Hey Sal. I think you've put your finger on why this post in particular aroused the anti-humor campaign.

We Jews recently observed the festival of Purim. As I blogged the other day, Purim celebrates the salvation of the Persian Jews from their enemy, the genocidal Haman. During the Purim service, everyone holds a small noisemaking instrument called a grogger. Whenever Haman's name is read out, everyone is supposed to shout out, stamp their feet, and shake their grogger lustily. In the old days, they would also burn effigies of Haman and write his name on the soles of their shoes.

Goldman Sachs is the Haman of the left. Destor's offense is that he failed to shake his grogger and stamp his feet when its name was invoked. And so, despite his long history of attacking corporate malfeasance at dagblog and other less prominent publications, he has therefore been reduced to a mere jokester cum corporate apologist who doesn't take the world's problems seriously.

Next time, we'll be sure to put up the headline: BREAKING: INSIDER REVEALS THAT GOLDMAN BANKSTERS ARE GREEDY!!!!

Actually, I only posted a comment after I read your comment.

And I do think the financial sector is preternaturally evil these days.

This isn't just bankers being bankers.  The world really did go to hell during this crime spree.  And the criminals have still barely been prosecuted.   And we know why: because they own all of our politicians.

And they are doing the same thing in Europe: lining up with paid off technocrats to dismantle democracies.

David Cameron, the very conservative Tory leader who is one of the world's leading proponents and architects of of the politics of austerity and financial sector counter-revolution against Europe's social democratic compact, was just over here yucking it up with our Tory president.

So I would say it's time to throw your grogger right at those motherfuckers.   And then go get a few slings and rocks and start slinging the rocks too.

All right, next time I'll check with you to confirm whose character I'm obliged to assassinate and whose I'm obligated to beautify. The good-banker-bad-banker thing is a little confusing.

PS In case it wasn't quite clear to you, I called Smith a weenie because his "whistle blowing" accusations were so tepid (though the muppet bit had some nice color).

Two Billionaires Side With Greg Smith Against Goldman

Two of Smith’s supporters, however, are among the world’s wealthiest: billionaires Jim Clark and Stephen Jarislowsky. ...  Clark ... tells me via email that Smith’s criticism of Goldman’s treatment of its customers is “what I experienced over the four to five years” he entrusted some of his funds with the firm’s private wealth management division.

And Roger Federer beat Tomasz Belluci in three tough sets yesterday.

BusinessWeek:

Bloomberg's Erik Schartzker, Stephanie Ruhle, Scarlet Fu, Sara Eisen and Sheila Dharmarajan report that Goldman Sachs Group Inc. saw $2.15 billion of its market value wiped out after an employee assailed Chief Executive Officer Lloyd C. Blankfein’s management and the firm’s treatment of clients, sparking debate across Wall Street.

The Awl:

When Greg Smith writes about the culture of Goldman—"teamwork, integrity, a spirit of humility"—those are not just empty words. They sound funny from the outside, sure! But "the Goldman way" was drilled into employees and executives in a way that likely has no other workplace equal in intensity outside of perhaps the Marines or the Symbionese Liberation Army. Being self-effacing; saying "we"; sharing credit; posting your working group on developments: people who bucked this process were beaten down until they conformed.

This culture—which also highly valued do-gooding and public service, or at least the ideas of such—is pretty much just brainwashing. (Not bad brainwashing particularly! But all the same.) That state prevents employees from realizing that Goldman's history of making money at any cost might have always been a part of the culture of the firm.

So, if I'm reading this right, the only thing worse than Goldman destroying the world is repentant Goldman boys getting a platform in the NYT to confirm that Goldman Sucks. The world would be so much better without the Times publishing op-eds like Smith's. Is that it?

Somehow I'm hoping Destor's piece was a parody of contrarian cynicism, but my satire-sensor wasn't picking up on it...

Hey Obey... It's less about what the Times shouldn't publish than about what it should.  I'd like to here less form disillusioned lawyers, doctors and investment bankers and more from disillusioned teachers, firefighters, and people stuck in mid-level corporate jobs around the country.  You know, the majority of us who put up with far worse than what Smith endured at Goldman.

You are a subversive and you know it wrestling man!

Wait.. you are a corporate shill part of a whispering campaign to discredit Mr. GoldmanSakSmith, but you can only do that by creating Haiku!!

Wait... who are you?

Hey Destor. Thanks for the response.

I don't think Smith's piece goes in the box of "lamentations of poor oppressed workers". He's not complaining about his working conditions or wage. He's saying his employer is a terrible and dangerous company. His op-ed is a kind of soft-core whistleblower piece. It's a repentant insider at a very powerful institution, not reporting on crimes as such, but exposing its highly corrupt and socially destructive culture.

And as such it is pretty valuable. If it makes Goldman boys a bit more embarrassed to say where they're working, if it makes others rethink what they've dedicated their lives to, if it makes some clients rethink who they're dealing with, and if it adds a little nudge to the Wall Street reform agenda, that's pretty good. I think it's doing all of those things.

I don't think it's fair to criticize the Times for publishing it on the grounds that there is other important stuff going on in the world too. If you think about it, the suffering teachers and firefighters you're thinking about are suffering in good part thanks to what the corporate culture of GS, and the rest of Wall Street, has done to the economy, the real-estate bubble they created, the municipalities they fucked over, etc.

So your comparison strikes me as kinda apples and oranges. Sure, you may really want more oranges, less apples, but this is one fucking big apple we've got here...

And as they say, when all you've got is apples, just make apple pie, dude! And appreciate it for what its worth.

I think I'm reacting to the Times being something of a newspaper for wealthy and aspirant New Yorkers when it could be so much more.  But, my argument that the Times shouldn't have bothered printing this obviously doesn't resonate much with anyone.  So, I'll accept that it's the weakest argument I made up top.  Maybe it was a fit of pique from me.

The Times ... could be so much more.

No it couldn't, Destor. That's its DNA. Same as wishing for a Goldman-Sachs that's a force for good, a Catholic Church without the pedophilia, or a Republican Party without the racism. I'm not saying things don't change and evolve (for good or ill), but it takes generations. Institutional memory and culture are mighty forces. 

Goldman Sachs games the system. So what?

I guess if we had some real serious system gaming, and we were going to war over it, say, something really huge, like gaming an oil for food program in Iraq, Destor would write a piece on it himself for a big magazine, like Forbes. What goes on behind the scene in big banks in NYC, who really cares?

You know that the dude I outed for gaming the Oil For Food program eventually went to jail for it, right?  I wish people hadn't gamed the Oil For Food program, by the way, since its failure was just another excuse for Bush to go to war.

As for Goldman's behind the scenes scheming... it's an open secret.  Lots of people have written about it in forums large and small.  It's also the case, as Barry Ritholtz says here that everybody's doing it, because it's endemic to banking and needs to be regulated.

I have agree with the Times's decision to run the piece, destor. Criticism of Goldman Sachs by an insider is a matter of public interest, in every sense of the phrase. And to be fair, the Times did recently run an op-ed by a disgruntled public school teacher.

I'm surprised to hear you joining in the ad hominem attacks against Smith. I take the personal nature of the attacks to be an admission that he's right, because Goldman Sachs can't win on the facts. And personal attacks are irrelevant even if they're accurate. Smith's character and motives are a separate question from the truth of what he's saying. Was he stalled at mid-career? Maybe? Doesn't mean he's a liar.

Do I wish he hadn't talked about ping-pong? Yes. Is he self-regarding in ways that undercut his persuasive power. Alas, yes. But he confirms things about that very powerful company (Lex Luthor Ltd.) that have been suggested by earlier evidence (such as the Fab Toure case), and he had an insider perspective that gave him information the rest of us don't see. (For example, that calling the clients derogatory names has become routine, even among relatively senior employees.)

His op-ed was a pastiche before it was a source for parody. He's almost certainly responding to an episode in the last season of Mad Men, in which the main character publishes a public statement in the Times about why he will no longer do advertising work for tobacco companies. That character is absolutely being self-serving; he's already lost his tobacco accounts and can't get another. But, even though he's selfishly motivated, everything he says about advertising tobacco is absolutely true. Smith doesn't have to be the selfless hero he'd like us to imagine for him to be dead right about Goldman Sachs.

I think the problem here is that Smith is only partly right.  He's right about the environment within Goldman now, but he's wrong that it was ever better or that it is unique to Goldman.  Those are crucial distinctions.

Yeah, but as Donal points out above, by being even "partly right" in a very public forum, Smith has caused G-S to lose more than $2 billion in market value. Pretty soon, you're talking real money!

I take the "sparking debate across Wall Street" bit with a grain of salt, but the op-ed has clearly raised public awareness. And it has given people like you an opportunity to argue that what Goldman exemplifies is longer-lasting, deeper and more widespread that Smith suggests. All good.

Is Smith self-serving? Is the New York Times hypocritical? Sure. Who cares?

Dan needs to watch more Stewart and Colbert, by the way. Treating pompous, bloviating idiots with accessible mockery can be more effective than any number of serious op-eds that only wonks read. Plus, Stewart can be devastating when he gets seriously angry, and Colbert has been a personal hero since he mocked President George Bush in front of a partisan Republican audience. We need royal jesters.

I agree that the cultural problem is not unique to Goldman, although I don't think Smith claimed it was. He was simply commenting on the institution he knew.

I do disagree with the assumption that the culture has not changed there. Even allowing for Smith's youth illusions and thirty-something disillusion, it may well be that things have turned worse there. That doesn't mean that I believe Goldman Sachs was previously a shining beacon of social benevolence, or that I don't acknowledge that Goldman, like other firms, sometimes had a conflict of interest with its clients. But there's a difference between a relatively client-centric firm that occasionally trades at the client's expense and a mainly predatory firm that occasionally does what's in the client's interest. It is very possible that an important balance has shifted inside that firm.

This is the danger of cynicism when it stops making distinction between degrees of corruption. When you say everyone on Wall Street is dirty, and always has been, you're shutting the door on any reforms and enabling the worst criminals because you refuse to single them out from the minor offenders. Even if everyone on Wall Street is a little dirty, they're not equally dirty. Some have to be watched more carefully; some need to be driven out of business as soon as possible. It's important to sort them out.

[Posted at Zero Hedge by Nomi Prins.  No fawning, and yet shockingly to the point and non-witty.]

From Nomi Prins, former Managing Director at Goldman Sachs and aithor of It Takes A Pillage

My Statement Regarding Greg Smith's Goldman Resignation

Today, I have received dozens of media requests and hundreds of emails regarding former Goldman Sachs executive, Greg Smith's gutsy, and internationally resonating, public resignation.

I applaud Smith's decision to bring the nature of Goldman's profit-making strategies to the forefront of the global population's discourse, as so many others have been doing through books, investigative journalism, and the Occupy movements over the past decade since my book, Other People's Money, was written after I resigned from Goldman. It would be great if Smith's illuminations would serve as the turning point around which serious examination and re-regulation of the banking system framework would transpire.

The inherent conflict of interest that firms such as Goldman possess through enjoying the multiple roles of 'market-maker,' 'securities creator' and 'client-advisor' foster an environment rife with systemic risk. The trading revenue portion of Goldman's profits, as well as its derivatives vs. assets ratio, is the highest amongst the American bank holding companies. And yet, in the fall of 2008, the Federal Reserve approved Goldman Sachs (along with Morgan Stanley) to alter its moniker from investment bank to bank holding company, thereby allowing it to gain access to federal subsidies and potential ongoing support.

In this regard, the firm's practices should remain under intense scrutiny by the general public and legislators. I would hope that the message behind Smith's resignation will not be obfuscated by debates over the extent to which the firm's clients are either supported or exploited, but instead, serve as a powerful call to foster a more-strictly delineated and less reckless financial system.

Dan, see new Rolling Stone Matt Taibbi article: Guy Who Rented All 94 Rooms of Aspen Hotel for Party Scores Awesome New Goldman Job.

Jeffrey Verschleiser, who assembled the 'sack of shit' mortgage packages at the late Bear Stearns is now 'global head of mortgage trading for Goldman Sachs' where we can be assured he will "make ethical or other compromises in order to do (his) job". His job being to do exactly what Greg Smith related in the NYT,  a job totally unlike an MTA or teaching job, one that that can, and has, brought the global economy to its knees.

Thanks for the tip NCD.

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