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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Also, at the height of the financial crisis in 2008, Warren Buffet’s company, Berkshire Hathaway, invested $5 billion in Goldman Sachs. Part of Mr. Buffet’s investment was in the stock, which he purchased for $115 a share. On Wednesday, the stock was selling for $120 a share, off about $4 a share.Skip to next paragraph
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Goldman Sachs, which made a profit of about $1 billion in the fourth quarter, is known for its intense work ethic and cutthroat culture. Each year the investment bank culls its ranks of underperforming executives and traders. However, in the past, the firm has also sent many of its alumni to Washington, including former Treasury Secretaries Robert Rubin and Henry Paulson.
“Many have worked there or wanted to work there,” says Ms. Peirce. “Goldman is elite but all the big banks have the reputation of people working very hard.”
Goldman officials are also politically active. In the 2012 cycle, Goldman Sachs, through its political action committee as well as individual contributions, is the top organizational donor to Mitt Romney’s presidential campaign, according to the Center for Responsive Politics/Open Secrets. Goldman Sachs and its officials have made 232 donations totaling $426,780.
In a letter to their employees on Wednesday, Goldman Sachs executives Lloyd Blankfein and Gary Cohn disputed Smith’s characterization of the firm. “Needless to say, we were disappointed to read the assertions made by this individual that do not reflect our values, our culture and how the vast majority of people at Goldman Sachs think about the firm and the work it does on behalf of clients,” wrote the two men in a letter posted on the firm’s website.
The Goldman Sachs officials said that as far as they knew, Smith, whom they never identified by name, had not expressed any misgivings through any of their anonymous channels. “If an individual expresses issues, we examine them carefully and we will be doing so this case,” they wrote.
The Goldman Sachs letter to its employees also noted that two weeks ago, Goldman was named one of the best places to work in the United Kingdom, where Smith resides.
Critics of Goldman Sachs blame its problems on a fixation with short-term profits. “It is just this short term grab for profits,” says T.J. Faircloth, director of research at Boston-based Corporate Accountability International, which monitors corporate behavior. “We see this across the board with other corporations.”
This jibes with Smith’s view of the big firm. In his op-ed, the former executive writes, “Today, if you make enough money for the firm (and you are not currently an ax murder) you will be promoted into a position of influence.”
Smith says he hopes his op-ed acts like a warning shot to the company’s board of directors.
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