Why I Am Leaving Goldman Sachs

[girl gone mad]

By GREG SMITH

TODAY is my last day at Goldman Sachs. After almost 12 years at the firm — first as a summer intern while at Stanford, then in New York for 10 years, and now in London — I believe I have worked here long enough to understand the trajectory of its culture, its people and its identity. And I can honestly say that the environment now is as toxic and destructive as I have ever seen it.

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.

(snip)

I knew it was time to leave when I realized I could no longer look students in the eye and tell them what a great place this was to work.

When the history books are written about Goldman Sachs, they may reflect that the current chief executive officer, Lloyd C. Blankfein, and the president, Gary D. Cohn, lost hold of the firm’s culture on their watch. I truly believe that this decline in the firm’s moral fiber represents the single most serious threat to its long-run survival.

read more: http://www.nytimes.com/2012/03/14/opinion/why-i-am-leaving-goldman-sachs.html?_r=2&pagewanted=all?src=tp

[geckosfeet]

1. Just saw this letter online. Well said. Too bad it had to be said in a resignation letter.

He appears to be the one ethical investmant banker on Wall St. Probably why they rode him out of town. Hope he starts his own company.

http://www.nytimes.com/2012/03/14/opinion/why-i-am-leaving-goldman-sachs.html
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.

It might sound surprising to a skeptical public, but culture was always a vital part of Goldman Sachs’s success. It revolved around teamwork, integrity, a spirit of humility, and always doing right by our clients. The culture was the secret sauce that made this place great and allowed us to earn our clients’ trust for 143 years. It wasn’t just about making money; this alone will not sustain a firm for so long. It had something to do with pride and belief in the organization. I am sad to say that I look around today and see virtually no trace of the culture that made me love working for this firm for many years. I no longer have the pride, or the belief.

How did we get here? The firm changed the way it thought about leadership. Leadership used to be about ideas, setting an example and doing the right thing. Today, if you make enough money for the firm (and are not currently an ax murderer) you will be promoted into a position of influence.

What are three quick ways to become a leader? a) Execute on the firm’s “axes,” which is Goldman-speak for persuading your clients to invest in the stocks or other products that we are trying to get rid of because they are not seen as having a lot of potential profit. b) “Hunt Elephants.” In English: get your clients — some of whom are sophisticated, and some of whom aren’t — to trade whatever will bring the biggest profit to Goldman. 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.

http://www.nytimes.com/2012/03/14/opinion/why-i-am-leaving-goldman-sachs.html
- "Today, if you make enough money for the firm (and are not currently an ax murderer) you will be promoted into a position of influence." - - This got a big wtf from me

Not that I don't believe Mr.Smith, but it seems unusual for someone at his level to put that comment in a resignation letter. But,,, he is calling it as he see's it. Better that the bosses at least hear it from the inside. They just ignore it when it comes from us poor slobs who hand over our life's savings for them to invest. They will probably ignore this too.

[tech3149]

2. Unfortunately the finance industry isn't alone in that mentality

My career was in electronics and the same could be said of the culture in the companies I worked with. I wish I still had a copy of my letter of resignation, not too dissimilar to Mr. Smiths'.
There is definitely a cancerous change in the mentality of the business world and it is contagious. I saw it infect my ex as she rose in the ranks in her businesses.
I just wonder what will be the kick in the ass needed to reset the moral compass to something that's more long term and equitable.

[Celebration]

3. probably the same thing is behind our running out of generic medicines

People are just meaner now than they used to be.

[Warpy]

5. The finanacial advisor I inherited along with dad's portfolio

said the same thing about Merrill Lynch. He's become increasingly phobic about big investing firms and has now gone as solo as one of those guys can. Needless to say, he's someone I've kept, along with clients who have serious money. I'm almost a charity case, but I'll take it.

At the same time, I'm watching Taibbi on Ratigan talking about Bank of America's record of sleazing their clients. This sort of thing is endemic in the industry, a one upmanship that is played to the detriment of clients.

When the derivatives go poof--and they will--they are going to take a hell of a lot with them, including most banks and investment companies. People will wonder where the Dow went as stocked is dumped and money is sucked out of the market in the final days to stop the collapse.

At that point, the banks will have to be nationalized because there isn't enough printed and electronic money on the face of the planet to bail out the derivatives market.

[ocd liberal]

4. Surprised we don't hear more of this!

After being with Morgan Stanley for 19 years, I feel quite the same way as Greg Smith about THAT firm. It used to be about people, employees and clients. Now they don't care about either.