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Why I Am Leaving Goldman Sachs - Greg Smith

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March 14, 2012 – Comments (7) | RELATED TICKERS: GS , NYT

[Op-Ed piece in today's New York Times that is generating a lot of buzz, and a good, interesting article, in my opinion.]

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.

Full article 

7 Comments – Post Your Own

#1) On March 14, 2012 at 11:39 AM, zzlangerhans (99.77) wrote:

Blech, completely ridiculous. The Op-Ed sounds like a pompous retread of Liar's Poker which was published 23 years ago. Of course, the guy did win a bronze in table tennis at the Maccabiah Games so I won't say it to his face.

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#2) On March 14, 2012 at 12:32 PM, constructive (99.97) wrote:

Calling clients "muppets" and not focusing on making them money actually seems tame compared to Liar's Poker.

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#3) On March 14, 2012 at 12:57 PM, kdakota630 (29.16) wrote:

Are you guys suggesting I read Liar's Poker?

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#4) On March 14, 2012 at 1:19 PM, zzlangerhans (99.77) wrote:

Just saying that the concept of a publicly traded corporation having priorities above and beyond profit is childishly naive. If they did then the stock would underperform, shareholders would sell and management would be fired.

If their clients are so stupid that they subscribe to a service that willfully screws them over, they deserve what they get. I suspect that most of GS clients actually do profit from their use of GS, regardless of the derogatory internal jargon at the company. A financial services corporation that truly damaged their clients would not thrive in a free market economy. The real damage GS causes is to the rest of the economy that is not part of their clientele.

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#5) On March 14, 2012 at 1:27 PM, SkepticalOx (98.62) wrote:

#4: I think Mr. Smith started working for Goldman when they were transitioning from a private partnership into a public corporation. Things can be and were different when the investment banks used to be private partnerships.

From Barry Ritholtz:

"Sure, profits matter, but Wall Street used to be about so much more than that. There was a culture of mentoring, developing, teamwork, a belief that doing the right thing for your clients was in your own best interest.

Firms that used to be Partnerships — as opposed to the publicly traded corporations of today — meant that you had to be more involved in what your partners were doing, as they had the ability to bankrupt the firm AND the individual partners. This was a huge factor in the dynamic –  and it made recruitment, training and mentorship all that much more important.

It was more than just Goldie — Think about Mother Merrill, and the generations of traders and investors who learned their craft in her embrace (Gone).

I hope I am not overly romanticizing the Wall Street of old. When you speak to some of the folks who have a long tenure in this business, you hear great stories of the old days. People I have been fortunate enough to meet and know in this business have painted quite a clear picture of what it once was like, and you cannot blame it all on the rosy glow of nostalgia. I have sat at the knee of people like Art Cashin and Doug Kass and Justin Mamis and Felix Zulauf and David Kotok and Walter Deemer and David Rosenberg and Barry Hyman. I have heard the stories — some bad, most of them good, quite a few of them hilarious.

Much of that is lost to the change to public companies — making quarterly numbers is a cruel taskmaster, one that makes such genteel ideas as culture and leadership passé.

Why do you think Bloomberg has never gone public . . . ?" 

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#6) On March 14, 2012 at 4:00 PM, outoffocus (23.80) wrote:

Firms that used to be Partnerships — as opposed to the publicly traded corporations of today — meant that you had to be more involved in what your partners were doing, as they had the ability to bankrupt the firm AND the individual partners. This was a huge factor in the dynamic –  and it made recruitment, training and mentorship all that much more important.

That, in a nutshell, is the fatal flaw of corporations.  They limit liability so much that the ones running the corp are not held accountable for their decisions.  This is why the CEO makes 300 times the salary of the average worker.  Why the executives can run a company into the ground and still walk away with a large golden parachute.  Why executives are short term focused instead of long term. Ultimately this is why Wall st. is more of a casino now than it is a place for long term investments.  An now we are giving these entities powers previously reserved for human beings.  Why would we give an entity that already has weak accountability more power? When will it end?

 

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#7) On March 15, 2012 at 1:02 AM, awallejr (35.95) wrote:

Have to agree with #6.  GS is basically a company that cares about personal bonus's over client needs.  Calling clients Muppets?  Seriously?  Anyone who sticks around with those snakes deserves what they get.  Leadership needs to quit and a revamp of the company's direction needs to be corrected.  At the present, this company is the epitome of greed and self dealing.

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