The one percent is turning on itself!
“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,” writes Greg Smith in the New York Times opinion piece that has got Goldman Sachs trending on Twitter. After 12 years with the company, Smith, an executive with the financial powerhouse, tendered his resignation with the op-ed, saying that the company is so “toxic” he can’t identify with it anymore.
“The culture was the secret sauce that made this place great and allowed us to earn our clients’ trust for 143 years,” Smith goes on to say, describing a company that once worked with integrity, humility, and care for its clients. But no more. Now, it’s all about making money, no matter what.
“It astounds me how little senior management gets a basic truth: If clients don’t trust you they will eventually stop doing business with you. It doesn’t matter how smart you are,” he says. Preach!
In response, a Goldman spokesperson says in a statement that the company disagrees with the views expressed by Smith (of course), and the business is based on the “fundamental truth” that they are only successful when their clients are. It’s a weak statement that rings hollow when compared with the obvious passion and gutsy move by Smith.
And with that, Smith delivers a mighty big blow to Goldman. Here’s an insider, someone who is expressing his years-long loyalty to this company telling us that what we always thought about Goldman is true: they are greedy and will do anything to turn a buck,even at the client’s expense. Occupy Wall Street was right all along!
In a separate article, The Times quotes a stat from the Yankelovich Monitor 2011: 41 percent of people “have little or no faith in the fairness of investment companies,” up from 26 percent three years prior. The Times’ Dealbook blog is also liveblogging the reactions, which are coming in from media outlets around the world.
Many of those reactions refer to Goldman’s reputation and how it will be damaged. Clients, unhappy with being referred to as “muppets” and even unhappier about being sold crap, may head for the door. Other employees, following Smith’s lead, may leave for less “toxic” firms. And certainly, the company is taking a beating from onlookers.
It was announced yesterday that Goldman had hired Richard Siewert Jr. as head of corporate communications, a move that had been anticipated for weeks, and actually took place weeks ago. The man is literally walking into a firestorm. The Wall Street Journal is offering some help with a crisis comms live chat at 2p.m.
[images: Top, tweet from Robert Peston, the BBC’s business editor. Bottom, Greg Smith, via The NYT]