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March 15, 2012

A Goldman Sachs executive director parts publicly with the company

Atlantic Yards Report

In a New York Times op-ed today headlined Why I Am Leaving Goldman Sachs, Greg Smith, a Goldman Sachs executive director, announced his resignation after almost 12 years at the firm.

He doesn't quite call the company a "vampire squid," in Matt Taibbi's famous formulation, but he does reference it.

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.

...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.

...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.

Goldman and AY

Goldman Sachs, of course, sold the bonds for the Atlantic Yards arena. No illegal behavior, but was it pushing the envelope? Maybe not to clients, but the deadline for the bond sale drove the timetable for the hasty Metropolitan Transportation Authority consideration of a revised railyard deal.

And Goldman last month seemed like it was running the Brooklyn Arena Local Development Corporation.


Posted by eric at March 15, 2012 11:59 AM