n the banking equivalent of the shot heard round the world, Goldman Sachs executive Greg Smith announced his resignation Wednesday in a "devastating" New York Times op-ed that accused the firm of ruthlessly exploiting its clients for profit. Smith assailed Goldman for its "toxic and destructive" business practices and "morally bankrupt" culture, and placed the blame squarely on CEO Lloyd Blankfein. The controversial Goldman boss has already been blasted by lawmakers for his company's dubious deals, and has forked over millions of dollars to settle fraud charges brought by the SEC. And Smith's rant isn't just a public relations debacle: Goldman's stock price dropped 3.4 percent the day the op-ed was published, wiping out $2.2 billion in shareholder value. Will Blankfein be forced to resign?
Goldman must oust Blankfein: Smith's resignation letter "would be a devastating indictment of any kind of business," says Frederick E. Allen at Forbes, but it's particularly bad for a bank supposedly "built on trust." Goldman's clients (whom the firm's employees apparently call "muppets") now know they're being ripped off at every turn. "Isn't a flight to the doors inevitable?" Goldman has brought this "terrible damage" on itself, and "must take drastic action to restore its reputation." The company's reform "must start at the top."
"To save Goldman Sachs, Lloyd Blankfein must go"
But Blankfein is still quite popular: Blankfein has "the best approval rating" of any CEO on Wall Street, says Jane Wells at CNBC. According to Glassdoor.com, 94 percent of Goldman employees approve of his leadership, and Goldman itself outranks J.P. Morgan Chase and Citigroup for employee satisfaction. Clearly, not everyone is as disgruntled as Greg Smith.
"Lloyd Blankfein vs. Jamie Dimon: Whose approval rating is higher?"
Blankfein's not going anywhere. But Goldman will have to change: The "easiest way to change perceptions of Goldman" is to "change its leadership," says John Cassidy at The New Yorker. But "given the iron grip that Blankfein exercises on Goldman, I don't think this is going to happen, at least not for awhile." However, even Blankfein "must realize that the take-no-prisoners business model he had championed" is "backfiring." Goldman is up to its ears in conflicts of interest, and has been the most aggressive and shameless profit-hunter on Wall Street — and now he and the firm are paying the price.
"The Goldman bomb: Will Blankfein survive?"
THE WEEK'S AUDIOPHILE PODCASTS: LISTEN SMARTER
- 31 TV shows to watch in 2014
- Why would a young person today be religious?
- The world's dumbest idea: Taxing solar energy
- He said he was leaving. She ignored him.
- Israel and Russia are getting along. Have the neocons noticed?
- Why Good Friday is so important to Christians
- Why we can't stop procrastinating, according to science
- The 6-year-old who woke up from a coma with a different personality
- 14 wonderful words with no English equivalent
- 100 orgasms a day: One woman's agonizing and rare medical disorder
Subscribe to the Week