March 15, 2012
Goldman Sachs In PR Crisis On Heels Of Top Exec's High-Profile Resignation: Greg Smith's Departure — Accompanied By Scathing NY Times Op-Ed — Exposes Inner Workings of Wall Street Firm's Elusive Corporate Culture
Goldman Sachs is obviously a world-famous company, even notoriously infamous. The Wall Street firm has morphed into a poster child for the financial meltdown and ensuing recession, but it has always been a financial powerhouse, albeit one with a corporate culture that no one really knew much about — until now. Greg Smith was, as of Tuesday, a Goldman executive director and head of its U.S. equity derivatives business in Europe, the Middle East and Africa. But as of Wednesday, he was a disgruntled ex-employee who emptied out his workplace baggage in the most visible manner imaginable — with a scathing op-ed in the NY Times bashing the company's greedy culture, citing its "eroding integrity" and how company leaders display a "culture quotient of exactly zero percent." "I can honestly say that the environment now is as toxic and destructive as I have ever seen it," Smith writes in the op-ed's opening paragraph. "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," he added. Not surprisingly, Goldman vehemently denies Smith's view: Firm management said it was "disappointed to read the assertions made by this individual that do not reflect our values, our culture and how the vast majority of people at Goldman Sachs think about the firm and the work it does on behalf of our clients," CNNMoney reports. "In a company of our size, it is not shocking that some people could feel disgruntled. But that does not and should not represent our firm of more than 30,000 people." The statement acknowledges that "everyone is entitled to his or her opinion," but since the company operates behind such iron gates, we outsiders may never know the truth.
Smith, who worked for the bank for 12 years, lays the blame squarely on Goldman's current CEO Lloyd C. Blankfein and president Garry D. Cohn, who he says "lost hold of the firm's culture on their watch." But former Goldman employees say that the change began much sooner — before Smith ever joined its ranks. "The real change was 1992 to 2002. That was when things became different," one former Goldman veteran told CNNMoney. "Now it's like any other listed company. It has to make money," the unidentified source added. Still, Smith's move serves as a reminder to Goldman that it must sharpen its image and face up to the now-familiar criticisms leveled at the institution with increasing frequency, CNNMoney reports.
Goldman Sachs may be a bank, but it's hardly one that dabbles in the parochial world of retail banking. Instead, Goldman is famous for a few things that only a few of us out there can relate to: Envious pay packets, brokering outrageously big deals and most of all, perhaps, demanding admissions and performance criteria which see the firm tout its expertise as the best money can buy. The problem, Smith alleges, is that Goldman is now outsmarting its clients, to their detriment. "Integrity? It is eroding," he writes. "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," Smith writes, reports CNN anchor and blogger Nina dos Santos.