Bonfire of the Vanities: Morally Bankrupt Goldman Sachs

from In These Times:



Rubes’ Gold in Sacks
The very public resignation of a Goldman Sachs executive exposes what most already new: The firm is morally bankrupt.

BY Chris Lehmann


America has finally learned just what it takes to wound the vanity of Goldman Sachs: attack its vaunted leadership culture.

For a surreal week or so in March, the financial world was abuzz with an anguished op-ed published in the New York Times by Greg Smith, a former Goldman executive director in London. Explaining his resignation from his derivatives desk, Smith catalogued how the firm’s traders casually deride their own clients, calling them “muppets” (i.e., stick-figure proxies fronting for the firm’s high-margin trades) and “elephants” (i.e., big game to be bagged for maximum returns). “It makes me ill how callously people talk about ripping their clients off,” Smith announced. “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.”

The reaction on Wall Street was swift and devastating. The day after Smith’s cri de coeur appeared, Goldman shares lost 3.4 percent of their value–some $2.2 billion, according to a Bloomberg report on Smith’s “searing essay.”

The loss was all the more remarkable in light of the firm’s recent track record. Even after the SEC exacted the largest-ever settlement in history over Goldman’s unscrupulous Abacus Fund, which short-sold the firm’s own mortgage-backed securities on the downslope of the housing bumble; even after Rolling Stone political scribe Matt Taibbi made the term “vampire squid” synonymous with Goldman’s signature pump-and-dump business model, Goldman continued to book historic profits, leading all other comers in fees from equity offerings and takeovers in 2011. ...................(more)

The complete piece is at: http://www.inthesetimes.com/article/13006/rubes_gold_in_sacks