Departing Goldman banker slams 'rip-off' culture

How do you find out the truth about what's going on in secretive organizations? From disgruntled ex-employees! Everyone else is keeping his/her mouth shut in order to get ahead. Who agrees with me on this? A whole lot of investors.

Goldman Stunned by Op-Ed Loses $2.2 Billion for Shareholders
By Christine Harper
Mar 14, 2012
(Bloomberg)

Goldman Sachs Group Inc. (GS) saw $2.15 billion of its market value wiped out after an employee assailed Chief Executive Officer Lloyd C. Blankfein’s management and the firm’s treatment of clients, sparking debate across Wall Street.

The shares dropped 3.4 percent in New York trading yesterday, the third-biggest decline in the 81-company Standard & Poor’s 500 Financials Index, after London-based Greg Smith made the accusations in a New York Times op-ed piece.

A departing Goldman Sachs Group Inc. employee mounted an unprecedented public attack on its "toxic and destructive" culture in a New York Times opinion piece, becoming the first serving insider to openly criticize the firm. Goldman Sachs said it disagreed with comments made by Greg Smith, identified by the newspaper as an executive director and head of the firm’s U.S. equity derivatives business in Europe. Gigi Stone and Christine Harper report on Bloomberg Television's "In the Loop."

Smith, who also wrote that he was quitting after 12 years at the company, blamed Blankfein, 57, and President Gary D. Cohn, 51, for a “decline in the firm’s moral fiber.” They responded in a memo to current and former employees, saying that Smith’s assertions don’t reflect the firm’s values, culture or “how the vast majority of people at Goldman Sachs think about the firm and the work it does on behalf of our clients.”...


Departing Goldman banker slams 'rip-off' culture
By Douwe Miedema and Lauren Tara LaCapra
Mar 14, 2012

(Reuters) - Goldman Sachs faced an unprecedented assault from one of its own after a banker published a withering resignation letter in the New York Times, calling the Wall Street titan a "toxic" place where managing directors referred to their own clients as "muppets."

It was the latest blow for the storied investment bank, which has long supplied senators and cabinet secretaries to Washington but now draws comparisons to a "great vampire squid wrapped around the face of humanity."

In an opinion column in Wednesday's Times, Greg Smith, who worked in equity derivatives, said Goldman had become "as toxic and destructive as I have ever seen it.

"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,'" Smith said.

In the United States "muppet" brings to mind lovable puppets like Kermit the Frog, but in Britain, "muppet" is slang for a stupid person.

..."Part of Goldman's defense is everybody is sophisticated and everybody knew as much as we knew did," the lawyer, Eric Lewis, said. "But if you're calling your clients muppets -- most muppets don't have the cranial capacity of Goldman."

In recent years the company has faced other high-profile incidents damaging to its image after the near-collapse of the global banking system in 2008.

Earlier this month it was accused of a major conflict of interest for advising El Paso Corp on its sale to Kinder Morgan, while being a significant shareholder in Kinder Morgan.

One of its bankers, Fabrice Tourre -- who referred to himself as "fabulous Fab" in emails -- is still embroiled in legal claims in the United States after allegations that he duped buyers of a complex credit instrument.

And two years ago, Chief Executive Lloyd Blankfein caused a media storm when he said that as a banker he was just "doing God's work," defending high banker pay and the role their institutions play in the economy.

Paul Volcker, a former Federal Reserve chairman, called the Smith piece a "reflection of the change in market mentality over the last 15, over the last 20 years."

At an economics summit in Washington hosted by the Atlantic magazine, he said when Goldman went public in the 1990s and bought a large trading operation, "it became a trading organization and not customer oriented."...