Another PR disaster is unfolding for Goldman Sachs (GS), the Wall Street investment bank that has already borne the brunt of popular wrath in the aftermath of the financial crisis.
A senior executive at the firm, Greg Smith, quit today in spectacular fashion, announcing his resignation in a scathing New York Times editorial in which he accused the firm of gleefully "ripping off" its clients and succumbing to short-term greed.
Within today's Goldman Sachs, Smith says, senior bankers often refer to the firm's clients as "muppets."
The firm has lost the culture of integrity, teamwork, and humility that once made it great, Smith says, and instead has become a place that is "as toxic and destructive as I have ever seen it."
"It makes me ill how callously people [in the firm] talk about ripping their clients off," Smith continues... "Leadership [at the firm] 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."
To say this is a devastating indictment of Goldman is an understatement. Outside observers have been saying similar things about the firm for years, but Goldman's response has been that it always puts its clients first and that outsiders--including Congress-people--just don't understand its business.
But now an insider has said the same thing.
And it seems to verify every criticism that has been lobbed at Goldman over the past several years.
When I worked on Wall Street in the 1990s, Goldman Sachs had a pristine reputation. The firm certainly wasn't "humble," by any means, and then, as ever, rainmakers generally did well. But Goldman also wasn't as venal and callous as the firm Smith describes today. And in those days, it would have been inconceivable to think that a departing Goldman executive would write a public screed like this.
Smith hopes that his editorial will serve as a wake-up call for Goldman's Board of Directors, which itself was tarred by a disgraceful insider-trading scandal last year. Assuming the reality is as Smith describes it, Goldman employees and shareholders would do well to take a long, hard look in the mirror.
(Meanwhile, a former aide of Treasury Secretary Tim Geithner has just joined Goldman Sachs as the head of global communications. He's certainly going to have a busy first day!)