Goldman Sachs executive resigns from 'toxic' bank

Goldman Sachs executive director offers his resignation in a scathing op-ed. He says Goldman Sachs' business culture is 'toxic and destructive.'

Mark Lennihan/AP
People come and go from Goldman Sachs headquarters, Wednesday, March 14, 2012 in New York. An executive resigning from Goldman Sachs, the powerful investment bank, said in a blistering essay that the company had lost its 'moral fiber.'

The very public resignation of Goldman Sachs executive Greg Smith is rekindling a three-year old debate over the business practices of big investment banks.

In an op-ed published Wednesday in The New York Times, the London-based banker slammed the organization’s professional culture, calling  it  “as toxic and destructive as I have ever seen it.” 

After working for 12 years at the firm, Mr. Smith wrote that the enthusiasm he once had working for the organization had withered away and that he could not work any “longer in good conscience.” He longs for the old days when teamwork, humility, and integrity were dominant among the firm's employees and charges top officials for the current moral erosion.

“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,” Smith wrote. “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.' ” 

Goldman Sachs responded to Smith’s accusations with a written statement. 

"We disagree with the views expressed, which we don't think reflect the way we run our business," Goldman said. "In our view, we will only be successful if our clients are successful. This fundamental truth lies at the heart of how we conduct ourselves."

In the aftermath of the 2008 financial crisis, Goldman Sachs along with other financial institutions that received government loans were castigated for their business methods. In 2010, the financial colossus was sued by the Securities and Exchange Commission (SEC) for misleading investors who had earlier bought a synthetic financial product that Goldman knew was constructed to fail.

Three months later, Goldman Sachs agreed to a $550 million fine from the SEC without admitting any wrongdoing. A year earlier, the company paid $60 million after an investigation by the Massachusetts attorney general into suspect subprime mortgages. The company has also come under criticism for aiding consecutive Greek governments hide the country’s huge debt by devising various financial schemes. 

Questionable business practices and large bonuses to executives have dented Goldman's reputation in the two years since Matt Taibbi, writing in Rolling Stone magazine, famously described it as  “a great vampire squid wrapped around the face of humanity, relentlessly jamming its blood funnel into anything that smells like money." 

Whatever his motives, Smith’s dramatic resignation is likely to spur more debate about the business practices of America's biggest financial institutions.

Wall Street traders come and go all the time, but few have quit with the flair of Greg Smith," writes Nelson Schwartz in The New York Times. "The way he resigned from Goldman Sachs, and what he had to say, could reignite a debate over how much Wall Street has changed in the wake of the financial crisis.”

of stories this month > Get unlimited stories
You've read  of  free articles. Subscribe to continue.

Unlimited digital access $11/month.

Get unlimited Monitor journalism.