if you took the greed out of wall st. all you'd have left is pavement

http://www.nationofchange.org/if-you-took-greed-out-wall-street-all-you-d-have-left-pavement-why-greg-smith-s-critique-way-too-nar

if you took the greed out of wall street all you'd have left is pavement: why greg smith's critique is way too narrow

Greg Smith, a Gold­man Sachs vice pres­i­dent, re­signed his post Wednes­day with a sting­ing pub­lic re­buke of the firm on the oped page of the New York Times — ac­cus­ing it of no longer putting its clients be­fore its own pe­cu­niary goals.

But if Mr. Smith be­lieves his ex­pe­ri­ence at Gold­man is some­thing new, he doesn’t know his­tory. In 1928, Gold­man Sachs and Com­pany cre­ated the Gold­man Sachs Trad­ing Cor­po­ra­tion, which promptly went on a spec­u­la­tive binge, lur­ing in­no­cent in­vestors along the way. In the Great Crash of 1929, Gold­man’s in­vestors lost their shirts but Gold­man kept its hefty fees.

If Mr. Smith be­lieves such dis­re­gard of in­vestors is unique to Gold­man, he doesn’t know the rest of Wall Street. In the late 1920s, Na­tional City Bank, which even­tu­ally would be­come Cit­i­group, repack­aged bad Latin Amer­i­can debt as new se­cu­ri­ties which it then sold to in­vestors no less gullible than Gold­man Sachs’s. After the Great Crash of 1929, Na­tional City’s top ex­ec­u­tives helped them­selves to the bank’s re­main­ing as­sets as in­ter­est-free loans while their in­vestors and de­pos­i­tors were left with pieces of paper worth a tiny frac­tion of what they paid for them.

The prob­lem isn’t ex­ces­sive greed. If you took the greed out of Wall Street all you’d have left is pave­ment. The prob­lem is en­demic abuse of power and trust. When bub­bles are form­ing, all but the most so­phis­ti­cated in­vestors can be eas­ily duped into think­ing they’ll get rich by putting their money into the hands of brand-named in­vest­ment bankers.