Issue of the week: Goldman Sachs’s ‘toxic’ culture

It was the op-ed heard round the financial world, said Susanne Craig and Landon Thomas Jr. in The New York Times. Greg Smith’s stinging public resignation from Goldman Sachs last week, in which he criticized the firm for its “morally bankrupt” culture, landed on Wall Street “like a bomb,” reigniting the debate over whether the greed and excess that caused the financial crisis still run unchecked. Smith, who had been with the firm for 12 years, said he was resigning because Goldman puts its own interests ahead of those of its clients, who are openly mocked as “muppets” within the firm. This “unusual cry from the heart of a Wall Street insider” further mars Goldman’s already tarnished reputation.

Give us a break, said Bloomberg.com in an editorial. Where exactly did Smith think he was working all this time—the Make-A-Wish Foundation? It must have been a “terrible shock” for him to realize that Goldman is indeed out to make money, and doesn’t exist “only to bring light and peace and happiness to the world.” Smith sounds more than “a little naïve,” said David Weidner in The Wall Street Journal. The old Goldman he imagines, where loyalty and respect supposedly trumped the bottom line, “hasn’t been around for a while, if it ever existed at all.”

Is that the best Goldman’s defenders can do? asked Ezra Klein in The Washington Post. Just because “it’s well known that the firm will do absolutely anything to make a quick buck” doesn’t make it excusable. Smith has identified a real shift: Goldman used to make money advising companies, which meant cultivating long-term relationships. Now it makes money trading, where short-term greed is rewarded, no matter the consequences for clients. Smith’s exit screed simply confirms that “sleazy practices” remain the norm on Wall Street, said Joe Nocera in The New York Times. More than three years after the financial crisis, any banker who generates big profits, even with practices that are “detrimental to society,” can still count on a “successful career and a multimillion-dollar bonus.”

Subscribe to The Week

Escape your echo chamber. Get the facts behind the news, plus analysis from multiple perspectives.

SUBSCRIBE & SAVE

Sign up for The Week's Free Newsletters

From our morning news briefing to a weekly Good News Newsletter, get the best of The Week delivered directly to your inbox.

From our morning news briefing to a weekly Good News Newsletter, get the best of The Week delivered directly to your inbox.

Sign up

Maybe this is how real financial reform begins, said Matt Taibbi in RollingStone.com. Washington’s regulatory efforts haven’t made much of an impact, and neither have the Occupy protests. But big investors can now see that their financial advisers are “arrogant sleazebags” who can’t be trusted to manage their money. Bailouts have allowed Goldman to think it need never fear going out of business. It’s time the “muppet” clients convinced it otherwise by “taking their business elsewhere.”