Goldman Sachs Executive Resigns Via Column In New York Times

Greg Smith, a Goldman Sachs executive, has resigned in a rather unique way, he’s written a very frank op-ed column in the New York Times, thereby fulfilling a fantasy held by every single person who has ever felt like quitting a job in a spectacular fashion. Mr. Smith, was head of Goldman’s United States equity derivatives business in Europe, the Middle East and Africa. He also managed the summer intern program in sales and trading. “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,” he says.

Smith’s letter cuts right to the bone, explaining that anyone who is not actually an ax murderer can succeed at Goldman Sachs by taking advantage of clients who trust them:

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.

Sometimes it can be hard to think of the extremely wealthy “elephants” as “customers,” but when it comes down to it, don’t they deserve quality service? Don’t they deserve to be treated fairly? Smith thinks so, and that’s why he doesn’t work at Goldman Sachs anymore.

He closes with this:

I hope this can be a wake-up call to the board of directors. Make the client the focal point of your business again. Without clients you will not make money. In fact, you will not exist. Weed out the morally bankrupt people, no matter how much money they make for the firm. And get the culture right again, so people want to work here for the right reasons. People who care only about making money will not sustain this firm — or the trust of its clients — for very much longer.

NYT’s Dealbook Blog has the reaction from the non-ax-murderers at Goldman Sachs:

“We disagree with the views expressed, which we don’t think reflect the way we run our business,” said a spokesperson for Goldman Sachs. “In our view, we will only be successful if our clients are successful. This fundamental truth lies at the heart of how we conduct ourselves.”

We suppose the firm’s clients will have the final say.

Why I Am Leaving Goldman Sachs [NY Times]

Live Blog: Reacting to Goldman Executive’s Resignation Letter [Dealbook]


Edit Your Comment

  1. rpm773 says:

    Meh. Something tells me this guy isn’t exactly going to go from Goldman Sachs directly to running a lost puppy shelter.

    • Evil_Otto would rather pay taxes than make someone else rich says:

      Why not? I’m sure he could afford to.

    • mikedt says:

      No he’s not. He’s starting his own investment firm so he’s managed to get a full page ad and hundreds of sites blogging about how moral and ethical he is without having to spend a dime of his own money. Smart.

  2. RandomMutterings says:

    Hmm. I suppose he will be surrendering some of the funds he took from his clients. Oh, no?

  3. AustinTXProgrammer says:

    Sounds like a giant advertisement for his next investment company. His will have the client focus the big boys lost.

    Either way he has probably made enough that he never needs to work another day in his life.

    • qwickone says:

      He also probably spent it all and is now complaining he can’t afford his summer house on the lake anymore.

  4. Tacojelly says:

    If this is untrue, why isn’t Goldman Sachs suing this guy for liable?

  5. There's room to move as a fry cook says:

    Really? The guy got rich fleecing customers and getting a cut of the revenue generated by all his underlings.

  6. comedian says:

    He had me at ax murderer.

  7. Billl says:

    So after umpteen years of fleecing customers….now he feels that they have lost touch and should be ashamed. But not him nooooo, retire in style on the ill gotten gains oh well.

  8. There's room to move as a fry cook says:
  9. Blueskylaw says:

    It only took him 15 years and $100,000,000 in salary before he found his conscience, though I do enjoy reading the dirt and how the company responds to it.

    • crispyduck13 says:

      “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.”

      Not that I’m defending this guy but apparently shit just got a little too real for him in recent years.

      • u1itn0w2day says:

        When everybody’s making money including the average guy in a good economy nobody says anything or gives a crap about what somebody else does. Oh your a banker ok Im a carpenter. But in bad times the pc police comeout in full force. Oh you’re a banker-FU. In a good economy working for Goldman ment status as well as money. Status has just as much importance for many. Plus in a bad economy when you start seeing the effects you might actually think about what you are doing who you are working for etc.

    • Kate says:

      He said he worked there 12 years and the first 10 the company did it the right way.

      • Jevia says:

        Heh, and if you believe that, there’s a mortgaged-backed collateralized debt obligation on a bridge to sell you.

  10. humperdinck says:

    It was a mission statement!

  11. Nighthawke says:

    There’s more from the letter: Emails from five different managing directors calling their own clients “Muppets”. In context, “It makes me ill how callously people talk about ripping their clients off. Over the last 12 months I have seen five different managing directors refer to their own clients as ‘muppets.'” This is British slang for a stupid person.

    And an analogy, comparing GS to a “great vampire squid wrapped around the face of humanity” dehumanizing and altering the culture GS was known for before ’08.

    Here’s the icing on the cake; “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. “

    Names are named, and nails aimed at the coffin’s edges. Oh, this ought to be fun how GS spins this one and how many are cut loose in the fallout.

    NYT’s comments section is ablaze with some heated postings regarding black hole funds and problematic customer service, yikes! But more than a few praising Mr.s Smith for his panache in coming out and posting this biting letter.

    I hope something good comes of it, and his future remains bright.

  12. crispyduck13 says:

    This letter is half “I quit” and half “hopefully my future new employer is reading this, because just look at all this great stuff I’ve done.”

    I just can’t take it seriously, mostly because I find that financial/derivative manipulators or investment bankers etc. don’t contribute meaningfully to the world or society overall in my eyes. He can go on and on about his accomplishments at GS, but what has he actually DONE? The real cactus in the asshole for me is that he’s become incredibly wealthy off this apparent uselessness.

  13. Trojan69 says:

    Jim Cramer has spoken often of the moral dilemma he could no longer handle in his job at GS. Of course, he is quick to say GS was in no way unique in the world.

    • u1itn0w2day says:

      I thought Cramer wanted to have his very own ‘Goldman Sachs’ type hedge fund. Where he admitted to calling reporters with tidbits and/or false rumors to pump stock. His average is around 50% from what I’ve heard which means let first graders and monkeys through darts at a stock and you will do just as well.

  14. bhr says:

    Folks need to read Drew Magary’s takedown of this ass over on deadspin.

    In summary, this wasn’t an outing so much as a job application.

    • ajaxd says:

      The piece about Mel Gibson making a film about his appearance at “Jewish Olympics” made me laugh.

  15. powdered beefmeat says:

    So, if you made millions working at a job that was legal but not necessarily ethical – would you quit right away or wait until your account reached a certain digit. I think this guy is a microcosm of most of us. A lot of money can cause ethical paralysis.

  16. Thalia says:

    Best part in Goldman’s answer: We have 30,000 employees AND 12,000 Vice Presidents. Apparently anyone not a janitor or copy boy is a VP at Goldman Sachs. Good to know.

  17. joescratch says:

    “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,” he says.

    He has a bright future in used car sales.

  18. Abradax says:

    He totally pulled a Jerry McGquire.

  19. varro says:

    Michael Lewis said pretty much the same thing in “Liar’s Poker” 23 years ago. Dump the crap on gullible rich people.

    The only difference between Las Vegas and Wall Street is that Wall Street calls the high rollers “elephants” instead of “whales”.

  20. u1itn0w2day says:

    This guy came from derivatives which I think is where the insurance or bets came/come out of. Alot are legit but others are so contrived and guaranteed losers like he says so it very well might be a rigged game he doesnt’ want to get caught rigging.

    I think he caught up in the company culture and money. How many people spill the beans at work-few to none. Most just want to fit in wether they’re blue or white collar. Most people do not work at a job for principle they work for MONEY, same as the 8-5 hourly clock puncher. And yeh I’d like to go out smoking my ex employer but then there’s those pesky job references and potential lawsuits.

    Good For Him.

  21. vicissitude says:

    Half of me cannot believe so many comments on here defending Goldman S. The other half believes it because of how damn corrupt people are these days. Maybe the guy actually did go by his own set of morals while working there. People can work within a work environment and do the best they can within their own moral framework. People are forced to do it all the time and increasingly companies get away with pushing the moral envelope further and further. Goldman’s advises Presidents, helps to deconstruct America and other countries as well. Wouldn’t it be great if people actually did spill the beans on these kinds of companies, Lord knows America needs a good Corporate Cleaning…

  22. Jevia says:

    Michael Lewis already wrote about the greed and corruption in the Wall Street industry in Liar’s Poker (1989) and the Big Short: Inside the Doomsday Machine (2010). Lewis also used to work on Wall Street until he learned how it all worked. He quit after 2 years.