It’s a bad day at Goldman Sachs, when one of its own resigns complaining that he found greater fulfillment coming third in a table tennis tournament than he did selling bad products to the firm’s “muppet” clients.
But Greg Smith has done a bold thing – the fantasy of everyone leaving a grim employer. Punish them as you walk out of the door. Goldman’s formal response was exactly as one might expect: disappointment and denial.
Smith will now undergo a full and public trashing. They’ll say he was too junior to know the truth; bitter at not advancing beyond his relatively lowly rank after 12 years at the company; soon to be fired anyway; an attention seeker and traitor who has let down the many people he worked with for years; a liar. It will all be done through intermediaries and unnamed sources. (Tabletennisnation reports players at a Chinatown club saying Smith wasn’t all that great a player: “capable of keeping up in matches, but way below any seriously competitive ability.”)
So, for Smith’s criticism to really mean something, it must be followed up with specifics: which deals sold to which clients caused him so much pain? In what instances did Goldman do what he accuses them of ? Was the sales culture he describes anything other than normal Wall Street practice? Does Smith have records and logs of his activities? Of the meetings he describes? Goldman’s clients are grown-ups. They know the company’s reputation.
At this point, he’s a PR problem – but a surmountable one. He’s broken ranks but he hasn’t really blown the whistle. He’s just said what people have been saying both inside and outside the company since Goldman went public in 1999. That its spirit of client service has been broken. That it puts its own profits over the interests of its clients – and lied about it.
In 2007, they sold mortgage products to clients and promptly bet against them. As Senator Carl Levin said after a full Senate investigation: “Why would Goldman deny what was so obvious, that they were engaged in a huge short in the year 2007? Because they gained at the expense of their clients and they used abusive practices to do it.”
Smith has come from inside to say what the likes of Matt Taibi have been saying for years. Goldman sucks. What’s new?
It’ll be interesting to see if Warren Buffett, Goldman’s fairy godfather and Blankfein’s no.1 fan, has anything to say.