The Hunt for Muppets
While most Americans associate the Muppets with Jim Hensen’s furry creatures, it turns out that “muppets” is slang for “stupid people” in Britain, where GregSmith worked in the bank’s London office.
Most people on the street are focusing on Goldman’s Response, and on whether #Goldman Sachs is really still trying to #screw their clients for their own enrichment.
Investors now are fearful of admitting that they deal with the firm, for fear of being ridiculed as Stupid by everyone around them.
Selling Toxic Investment Garbage to Clients
Goldman Sachs (according to author Michael #Lewis) made their money by deceiving their clients and selling them toxic investment garbage while Goldman was secretly ‘shorting’ that very same investment garbage that they were selling to clients as an excellent investment.
Perhaps the ultimate in two faced #hypocrisy, but apparently normal to Goldman Sachs.
However, that is the nature of the business and most everyone in that business is as cold and uncaring about clients’ money as everyone else in the business.
It’s just “f…… paper” is a favorite phrase.
Let’s Stop and Think about This
Do you really believe that someone that worked in that environment is an innocent nice guy?
This “nice” guy worked there for 12 years and essentially received his entire business education there, and made a lot of money there.
Now we are expected to believe that Greg Smith has FOUND RELIGION. After 12 years of dealing in the Goldman Sachs atmosphere, Mr. Smith has found a conscience, where no conscience existed before.
He didn’t find his conscience when he was selling toxic garbage investments to clients. He didn’t find that conscience any time in the past 12 years.
But He Found His Conscience Now, and He Expressed His Feelings as He was Leaving Goldman Sachs – AFTER 12 YEARS of making money at Goldman Sachs!
Perhaps He Found His Conscience for a Different Reason – Perhaps a Greedy Reason
Let’s think about what just happened. Is it possible that Mr. Smith was trying to break his own clients’ loyalty with Goldman Sachs by painting the firm in such a terrible light? I don’t doubt that Goldman does exactly what Mr. Smith says it does.
But is the real motive for such a #scandalous resignation document the callous attempt by Mr. Smith to join another firm – perhaps for a massive signing bonus – if Mr. Smith is able to bring a large book of business with him?
If somehow Mr. Smith’s clients could be convinced of how much Mr. Smith cares for them, and how uncaring Goldman Sachs is, then wouldn’t those clients consider leaving Goldman to join with Mr. Smith at his new firm?
That perhaps makes some sense, and it certainly fits in with the profile of someone who could climb to middle management in a firm that was greedy, callous and uncaring. Screw everyone would be a great motto, if we believed what is being said.
It most assuredly fits the facts here. It fits the facts a lot more that Mr. Smith finding a conscience after 12 years of learning how to screw clients courtesy Goldman Sachs.
Financial Suicide
Perhaps there is another reason for all of this. Perhaps Greg Smith did find the atmosphere so toxic at Goldman Sachs that he couldn’t take it any more. Perhaps he was feeling more and more uncomfortable as the days passed, especially after the financial meltdown of 2007-8-9, when it become well know that his firm was acting in such a #despicable manner.
If Mr. Smith actually found his conscience and intends to leave the industry, I compliment him. He would have had an unusual large amount of courage to write such a piece as his parting farewell.
If he actually is looking for a career in a different industry, I wish him well. After all, he has just made himself an undesirable in this industry.
The views expressed in this blog are opinions only and are not investment advice. Persons investing should seek the advice of a licensed professional to guide them and should not rely on the opinions expressed herein. This blog is not a solicitation for investment and we do not accept unsolicited investment fund.
Why I Am Leaving Goldman Sachs
By GREG SMITH
Published: March 14, 2012
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 might sound surprising to a skeptical public, but culture was always a vital part of Goldman Sachs’s success. It revolved around teamwork, integrity, a spirit of humility, and always doing right by our clients. The culture was the secret sauce that made this place great and allowed us to earn our clients’ trust for 143 years. It wasn’t just about making money; this alone will not sustain a firm for so long. It had something to do with pride and belief in the organization. I am sad to say that I look around today and see virtually no trace of the culture that made me love working for this firm for many years. I no longer have the pride, or the belief.
But this was not always the case. For more than a decade I recruited and mentored candidates through our grueling interview process. I was selected as one of 10 people (out of a firm of more than 30,000) to appear on our recruiting video, which is played on every college campus we visit around the world. In 2006 I managed the summer intern program in sales and trading in New York for the 80 college students who made the cut, out of the thousands who applied.
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.
When the history books are written about Goldman Sachs, they may reflect that the current chief executive officer, Lloyd C. Blankfein, and the president, Gary D. Cohn, lost hold of the firm’s culture on their watch. I truly believe that this decline in the firm’s moral fiber represents the single most serious threat to its long-run survival.
Over the course of my career I have had the privilege of advising two of the largest hedge funds on the planet, five of the largest asset managers in the United States, and three of the most prominent sovereign wealth funds in the Middle East and Asia. My clients have a total asset base of more than a trillion dollars. I have always taken a lot of pride in advising my clients to do what I believe is right for them, even if it means less money for the firm. This view is becoming increasingly unpopular at Goldman Sachs. Another sign that it was time to leave.
How did we get here? The firm changed the way it thought about leadership. Leadership 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.
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.
Today, many of these leaders display a Goldman Sachs culture quotient of exactly zero percent. I attend derivatives sales meetings where not one single minute is spent asking questions about how we can help clients. It’s purely about how we can make the most possible money off of them. If you were an alien from Mars and sat in on one of these meetings, you would believe that a client’s success or progress was not part of the thought process at all.
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.
These days, the most common question I get from junior analysts about derivatives is, “How much money did we make off the client?” It bothers me every time I hear it, because it is a clear reflection of what they are observing from their leaders about the way they should behave. Now project 10 years into the future: You don’t have to be a rocket scientist to figure out that the junior analyst sitting quietly in the corner of the room hearing about “muppets,” “ripping eyeballs out” and “getting paid” doesn’t exactly turn into a model citizen.
When I was a first-year analyst I didn’t know where the bathroom was, or how to tie my shoelaces. I was taught to be concerned with learning the ropes, finding out what a derivative was, understanding finance, getting to know our clients and what motivated them, learning how they defined success and what we could do to help them get there.
My proudest moments in life — getting a full scholarship to go from South Africa to Stanford University, being selected as a Rhodes Scholar national finalist, winning a bronze medal for table tennis at the Maccabiah Games in Israel, known as the Jewish Olympics — have all come through hard work, with no shortcuts. Goldman Sachs today has become too much about shortcuts and not enough about achievement. It just doesn’t feel right to me anymore.
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.
Source: The New York Times
