I think it's safe to say that the
vampire squid Goldman Sachs brand has taken a few hits in recent years. To add to the calumny, Greg Smith, an executive director and head of the firm’s United States equity derivatives business in Europe, the Middle East and Africa, is leaving Goldman today after publishing an op-ed in the New York Times explaining why he's leaving. It's not pretty:
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.
Man, that best-of-luck office party is going to be awkward.
The fact that this op-ed has already spawned its own satire suggests that it's not going to have much of an effect on the larger debate on Goldman Sachs. Which is a shame, because such a debate would be pretty useful when thinking about Big Finance (though see Gabriel Sherman's excellent New York essay on this topic from a few weeks back). Indeed, this is a teachable moment for how to compose a memo, or a mission statement, or an op-ed that will provoke a deep debate over corporate culture. Let's see where Smith went wrong:
1) He made it all about himself. The ostensible point of this exercise is to shine a light on a shady corporate culture that values sins over virtues. In these instances, the following paragraph should never appear:
My proudest moments in life — getting a full scholarship to go from South Africa to Stanford University, being selected as a Rhodes Scholar national finalist, winning a bronze medal for table tennis at the Maccabiah Games in Israel, known as the Jewish Olympics — have all come through hard work, with no shortcuts. Goldman Sachs today has become too much about shortcuts and not enough about achievement. It just doesn’t feel right to me anymore.
See how that was ostensibly about Goldman Sachs but was really about the author? Not a good sign.
2) His job apparently required him to burrow out and reside in a large soundproof hole in the ground. Let's take a look at what Smith said about the halcyon, early days of his Goldman Sachs tenure -- i.e., when he started in 2000:
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....
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.
Excuse me for a sec, I need to do this for a spell.
Look, Smith should know the Goldman Sachs culture better than I do, but as an outsider, I am fairly certain of two things: A) Before Smith's op-ed, the terms "humility" and "Goldman Sachs" never appeared in the same sentence.... ever; and B) Making money was always how people got promoted at Goldman Sachs.
There's been enough written about Goldman Sachs to know that by 2006, the firm had recognized that it was badly overexposed in the subprime market and decided to dump their holdings onto their clients. We know that in 2007, the firm went so far out of bounds that the SEC actually brought a civil suit against them, securing a $550 million settlement more than 18 months ago. And now Smith notices something is amiss??!! While the Wall Street Journal suggests Smith's role at Goldman wasn't pivotal, this kind of naivite requires a special kind of willful blindness.
If you're going to be a whistle-blower, you need to acknowledge upfront your complicity in any malfeasance, be it legal or ethical. Smith's op-ed doesn't come close to doing this.
Daniel W. Drezner is professor of international politics at the Fletcher School of Law and Diplomacy at Tufts University.