The Sad State of Goldman, Merrill, et. al.

Everyone is all abuzz this morning about the acerbic resignation letter of Greg Smith, head of the firm’s United States equity derivatives business in Europe out of their London office.

Did I say letter? It was an OpEd published in the NYT, Why I Am Leaving Goldman Sachs .

“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.”

I disagree with my colleague, Josh Brown, who writes: “The “culture” of Goldman Sachs was, is and always will be about making money, often at the expense of a client” (How to Quit a Job Without Publishing an Op-Ed).

Sure, profits matter, but Wall Street used to be about so much more than that. There was a culture of mentoring, developing, teamwork, a belief that doing the right thing for your clients was in your own best interest.

Firms that used to be Partnerships — as opposed to the publicly traded corporations of today — meant that you had to be more involved in what your partners were doing, as they had the ability to bankrupt the firm AND the individual partners. This was a huge factor in the dynamic —  and it made recruitment, training and mentorship all that much more important.

It was more than just Goldie — Think about Mother Merrill, and the generations of traders and investors who learned their craft in her embrace (Gone).

I hope I am not overly romanticizing the Wall Street of old. When you speak to some of the folks who have a long tenure in this business, you hear great stories of the old days. People I have been fortunate enough to meet and know in this business have painted quite a clear picture of what it once was like, and you cannot blame it all on the rosy glow of nostalgia. I have sat at the knee of people like Art Cashin and Doug Kass and Justin Mamis and Felix Zulauf and David Kotok and Walter Deemer and David Rosenberg and Barry Hyman. I have heard the stories — some bad, most of them good, quite a few of them hilarious.

Much of that is lost to the change to public companies — making quarterly numbers is a cruel taskmaster, one that makes such genteel ideas as culture and leadership passé.

Why do you think Bloomberg has never gone public . . . ?


Why I Am Leaving Goldman Sachs
NYT, March 14, 2012

See also:
Why I am leaving the Empire, by Darth Vader (Daily Mash)

A Response from Goldman Sachs From Chairman Lloyd Blankfein (The Borowitz Report)

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