I know nothing of high-finance. I mean, I get the concept of investing in the stock market, but could not tell you what a derivative, a penny stock, a junk bond is. I took my money out of the stock market and put it into cash accounts for moral reasons. I also know that my cash accounts, to be able to accrue interest to pay me, probably are indirectly invested in the stock market, somewhere down the line. I also know that moving my money resulted in a probable loss....I could have earned more in the market. Cash is doing nothing right now. Anyway, here is an interesting op-ed in the New York Times today by Greg Smith, an executive director at Goldman Sachs. It's a pretty damning indictment of the culture of greed that permeates Wall Street. "Why I Am Leaving Goldman Sachs." Others here will know much more about the nuts and bolts behind reasons he gives here, so I'll let them respond to comments. Here are a few paragraphs:
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.
To put the problem in the simplest terms, the interests of the client continue to be sidelined in the way the firm operates and thinks about making money. Goldman Sachs is one of the world’s largest and most important investment banks and it is too integral to global finance to continue to act this way. 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.
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,” sometimes over internal e-mail. Even after the S.E.C., Fabulous Fab, Abacus, God’s work, Carl Levin, Vampire Squids? No humility? I mean, come on. Integrity? It is eroding. I don’t know of any illegal behavior, but will people push the envelope and pitch lucrative and complicated products to clients even if they are not the simplest investments or the ones most directly aligned with the client’s goals? Absolutely. Every day, in fact. It astounds me how little senior management gets a basic truth: If clients don’t trust you they will eventually stop doing business with you. It doesn’t matter how smart you are.