One of the big stories today is the resignation of Greg Smith, a Goldman Sachs executive director and head of the firm's United States equity derivatives business in Europe, the Middle East and Africa. He has announced he's quitting in a long piece in the New York Times where he denounces the firm for ripping off clients.
Smith writes: "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 … "Call me old-fashioned, but I don't like selling my clients a product that is wrong for them. c) Find yourself sitting in a seat where your job is to trade any illiquid, opaque product with a three-letter acronym … These days, the most common question I get from junior analysts about derivatives is, "How much money did we make off the client?" It bothers me every time I hear it, because it is a clear reflection of what they are observing from their leaders about the way they should behave. Now project 10 years into the future: You don't have to be a rocket scientist to figure out that the junior analyst sitting quietly in the corner of the room hearing about "muppets," "ripping eyeballs out" and "getting paid" doesn't exactly turn into a model citizen."
That's about as public as you can get.
Smith's words echo the sentiments of Rolling Stone writer Matt Taibbi who described Goldman Sachs as the "great vampire squid wrapped around the face of humanity, relentlessly jamming its blood funnel into anything that smells like money", and engineering every market manipulation since the Great Depression.
Still, with Goldman Sachs continuing to make big profits, this Vampire Squid is unlikely to die, even if more of its executives resign in disgust.