March 14th, 2012
05:51 PM GMT
London (CNN) – We’ve all seen it before: A disgruntled employee quits his or her job and takes that fateful decision of putting pen to paper in fiery fashion.
The result varies from a whiny monologue to a master class in corporate psychology, depending on how familiar you are with their firm.
Unfortunately for Goldman Sachs, the company was already a household name by the time former executive Greg Smith chose to voice his reservations about it so publicly in The New York Times today.
The paper presumably wouldn’t have opted to publish the OpEd had Goldman not been such a high profile - and yet super secretive - institution.
For all the press attention Goldman has gathered over the years, those on the outside still know relatively little about what goes on inside its gilded cage.
As such, Goldman may be a well-known name but it’s hardly a well-known company. This is how its executives famously like to keep things at Goldman - discrete. That was until Smith drafted his 1,271 word opus.
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."
This is a view Goldman strenuously denies.
Writing in response, Goldman’s 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.
"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."
Nevertheless it concedes "everyone is entitled to his or her opinion."
It’s hard to know who’s right without having spent time at Goldman first hand.
However it is likely some of Smith’s former colleagues at Goldman may have spent the first part of the day perusing his prose with a hefty degree of schadenfreude, and the second part assuring clients they haven’t been ripped off.
Smith, who worked for the bank for 12 years and most recently ran the firm’s U.S. derivatives business in Europe, Middle East and Africa, lays the blame squarely on Goldman’s current CEO Lloyd C. Blankfein (pictured above) and President Garry D. Cohn, who he says "lost hold of the firm’s culture on their watch."
Former Goldman employees tell me, however, that the culture began to change well before that. "The real change was 1992 to 2002. That was when things became different," says one former Goldman veteran.
"Now it’s like any other listed company. It has to make money."
In 1999, under the stewardship of Hank Paulson, former U.S. Treasury Secretary, and fallen financier Jon Corzine, Goldman moved to shed its 221-member partnership and became a publically traded entity.
The outcome: Shorter-term incentives for Goldman’s staff and shareholders and more pressure to produce "P&L," slang for making money.
Mind you, if Smith has been at Goldman for just 12 years he wouldn’t have been part of the Goldman generation that witnessed the firm’s golden era and cashed in big-time.
Still, Smith’s move serves as a reminder to Goldman that it must sharpen its image and face up to the now-familiar criticisms levelled at the institution with increasing frequency.
It’s been two years since Matt Taibbi branded Goldman a "great vampire squid wrapped around the face of humanity, relentlessly jamming its blood funnel into anything that smells like money," in Rolling Stone magazine and still it remains an icon of excess.
On Smith’s Facebook page friends and family applauded his "bravery" in his David and Goliath battle against what some see as the "leanest and meanest" of Wall Street’s stalwarts.
One friend couched it perfectly wishing Smith "Congratulations and/or condolences. I would expect nothing less from you."
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