NYT: Why I Am Leaving Goldman Sachs
Wednesday, March 14, 2012
Many investors in precious metals have lost a degree of trust and faith in the modern
global financial system. Following events in 2008 and the unprecedented bailouts
during the U.S. mortgage meltdown, faith in U.S. banks plummeted. Since then there
have been numerous lawsuits and SEC actions that have brought to light the lack
of integrity and the sheer greed that has come to be associated with U.S. banks.
In an op-ed piece today, Greg Smith, a 12 year Goldman Sachs employee wrote a scathing
account of the current state of what is commonly thought of as the best U.S. investment
bank. Below are some of the more choice excerpts:
TODAY 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.
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.
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.
The full Op-Ed
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