Wednesday, March 14, 2012
Why I am leaving Goldman Sachs
Unfortunately it is not actually me that is leaving Goldman Sachs. If I were I would probably be better off financially than I am.
Greg Smith in a NY TIMES article with the above title explains why he is resigning as an executive director. He was also head of the firm's U.S. equity derivatives business.
Smith worked for Goldman Sachs for almost twelve years. His fundamental reason for resigning is that he can no longer tolerate the culture of the firm. He says the culture of the firm is as toxic and destructive as he has ever seen it. Apparently the financial crisis and its aftermath has done nothing to improve the corporate culture.
According to Smith at one time Goldman Sachs took pride in making sure it put the interests of its clients at the forefront. The firm dealt with clients with integrity and on the up and up. Now Smith claims the culture is to make money for the firm as much and as quickly as possible. He describes some of the techniques used but I recommend reading his whole article. The firm has its own special terms that show the corrupt character of the operation that Smith is rejecting.
Workers talk about "axes". These are stocks or other financial products that Goldman-Sachs wants to unload since they are seen as lemons not likely to produce much profit. One should Hunt Elephants that is get clients to trade whatever will make the most profit for Goldman-Sachs. In both these cases if you do these sort of things and make a lot of money for Goldman-Sachs you will advance in the company. For Smith this is plain wrong since the company as he sees it should make money because it provides good service for its clients.
This is just a sample of what Smith has to say. His account of how the company operates certainly verifies what many critics have said. I suppose one could fault Smith for not bailing out earlier. But better late than never. See the full article here.