Goldman Sachs culture 'toxic'? Letter confirms suspicions about Wall Street.
Polls show that Americans hold a very low opinion of Wall Street, and a damning public letter of resignation from a Goldman Sachs executive could only amplify that perception.
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Mr. Smith, with more than decade at the firm, then goes on to describe the culture at Goldman Sachs “as toxic and destructive as I have ever seen it.”
He says he knew it was time to leave when he could no longer look students being recruited by Goldman Sachs in the eye and tell them Goldman was a great place to work. Instead, he describes a place where making money off the firm’s clients became the mantra.
Smith’s description of the firm fits with Main Street’s perception of Wall Street these days. Despite the run-up in the stock market, many people view Wall Street as a place where fat cats rake in huge bonuses, and lobby aggressively against attempts by Congress to rein in their activities.
“Wall Street is not held in high regard so this is certainly not going to help,” says Dennis Jacobe, chief economist at the Gallup Organization in Washington. “I think one of the things that is under-perceived on Wall Street and many of the financial sectors is how badly the financial crisis has hurt the reputation of everyone involved with Wall Street.”
In a survey published last December, Harvard’s Center for Public Leadership ranked Wall Street at the bottom in terms of American’s confidence in its leadership. Congress, the media, and the White House all ranked higher.
Even long-time Wall Street observers agree that the perceptions are distinctly negative.
“Wall Street is not doing a very good job of explaining its importance to the economy and the good it does,” says public relations executive Richard Torrenzano of the Torrenzano Group and a former spokesman for the New York Stock Exchange. “It helps corporations and new organizations raise money in a public environment, and that money is used to build new plants, create jobs, and really help the quality of life in which we live.”
However much good Wall Street does is far overshadowed by the public’s memory of 2008 financial crisis, which ultimately lead to the Great Recession.
“People will always be suspicious of banks,” says Hester Peirce, a senior research fellow at the Mercatus Center at George Mason University and a former Securities and Exchange Commission official. “Part of the reason is that Main Street has suffered so tremendously, and people are still mad at the banks getting all the money they got.”
At the height of the financial crisis, Goldman Sachs, like other large financial institutions, borrowed money from the federal Troubled Asset Relief Program (TARP). And, like other large banks, it repaid those loans with interest.