Thursday, March 15, 2012

Thug culture

Goldman Sachs' CEO Lloyd Blankfein
TODAY is my last day at Goldman Sachs. After almost 12 years at the firm — first as a summer intern while at Stanford, then in New York for 10 years, and now in London — I believe I have worked here long enough to understand the trajectory of its culture, its people and its identity. And I can honestly say that the environment now is as toxic and destructive as I have ever seen it.  It is rare for a bank industry insider with 12 years of experience to have the courage to blow the whistle on a giant like Goldman Sachs. Greg Smith's resignation letter, published in the New York Times, reveals a bombastic culture of indolence & self-profit out of Mario Puzo's Mafia novels. This is not the letter of a disgruntled employee. Smith takes his time to show the difference between the company he started working for and the one he leaves in shame.

Goldman Sachs sacrificed fiduciary principles for quick profits:*
It might sound surprising to a skeptical public, but culture was always a vital part of Goldman Sachs’s success. It revolved around teamwork, integrity, a spirit of humility, and always doing right by our clients. The culture was the secret sauce that made this place great and allowed us to earn our clients’ trust for 143 years. It wasn’t just about making money; this alone will not sustain a firm for so long. It had something to do with pride and belief in the organization. I am sad to say that I look around today and see virtually no trace of the culture that made me love working for this firm for many years. I no longer have the pride, or the belief. 
The daily dealings at the bank make your skin crawl:
What are three quick ways to become a leader? a) Execute on the firm’s “axes,” which is Goldman-speak for persuading your clients to invest in the stocks or other products that we are trying to get rid of because they are not seen as having a lot of potential profit. b) “Hunt Elephants.” In English: get your clients — some of whom are sophisticated, and some of whom aren’t — to trade whatever will bring the biggest profit to Goldman. Call me old-fashioned, but I don’t like selling my clients a product that is wrong for them. c) Find yourself sitting in a seat where your job is to trade any illiquid, opaque product with a three-letter acronym.
What many of us had suspected goes on all the time. Wall Street is self-destructive but it destroys all but itself: 
 Today, many of these leaders display a Goldman Sachs culture quotient of exactly zero percent. I attend derivatives sales meetings where not one single minute is spent asking questions about how we can help clients. It’s purely about how we can make the most possible money off of them. If you were an alien from Mars and sat in on one of these meetings, you would believe that a client’s success or progress was not part of the thought process at all.
Smith redefines the banality of post-capitalist blue-collar crime: 
 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,” sometimes over internal e-mail. Even after the S.E.C., Fabulous Fab, Abacus, God’s work, Carl Levin, Vampire Squids? No humility? I mean, come on. Integrity? It is eroding. I don’t know of any illegal behavior, but will people push the envelope and pitch lucrative and complicated products to clients even if they are not the simplest investments or the ones most directly aligned with the client’s goals? Absolutely. Every day, in fact.
Is Goldman Sachs' culture likely to change soon?

WHY SHOULD I?
_______________
(Goldman Sachs' rebuttal here)

Check Lloyd Blankfein's perfunctory last paragraph:
As to those of you who were serviced by Mr. Smith, it’s understandable that you would be concerned about who will be taking his place going forward.  On that front, I have some exciting news: today, Goldman is pleased to announce that our new executive director and head of the United States equity derivatives business in Europe, the Middle East and Africa will be Mr. Joseph Kony.  For those unfamiliar with Mr. Kony’s resume, let me assure you that he has the character and moral standards you have come to expect from Goldman, and like the rest of us here at the bank, he has dedicated his life to doing the Lord’s work.
Whom do you believe?
_______________
*As Smith points out in his letter, without this balance, there is no banking industry (something the present culture ignores, as if the money they are dealing with did not belong to real people). Even in the most selfish scenario, a bank should preserve the interests of those they do business with.

20 comments:

Feminista said...

The only thing I can say is: shameful.

Anonymous said...

This, along with other aspects of our political circle, shows just how far business will go to make the highest profit at whatever expense. The problem with capitalism is that everything is corporate-focused, from our wars to our medicine, and at the end the so called 'little men' get extorted. We don't get weapons contracts, or cheap labor for our factories, we ARE cheap labor, or lab rats, or pick-pocketted and left with useless products. Seriously shameful
-Daniella Lopez

Anonymous said...

I agree with both the previous comments. The US has become a Banana Republic.

Llompart said...

Isn't this kind of corruption to be expected in institutions like Goldman Sachs? Isn't corruption like this what lead to the housing market collapse?
It is clear that corporations, like individuals, like governments are going to do what is in their own best interest. The immoral ones will not care about who gets hurt in the process.
The only counter measure is to be aware of this and seek the knowledge to defend one's self against such entities and to stand up to and denounce them when possible, as well as foster morality and virtue in our own actions.

Alfredo Triff said...

The only counter measure is to be aware of this and seek the knowledge to defend one's self against such entities and to stand up to and denounce them when possible, as well as foster morality and virtue in our own actions.

It's the only way.

Joaquin Lares said...

I do not find it surprising either that corruption is present in companies such as Goldman Sachs. Reason for which I agree with Llompart’s post:
"The only counter measure is to be aware of this and seek the knowledge to defend one's self against such entities and to stand up to and denounce them when possible, as well as foster morality and virtue in our own actions."
However, I wonder what the turning point between honesty and corruption is when it comes to working for companies such as the latter. Everyone seems to have a "number" in which profit seems to overcome all sort of honesty. Although it is admirable that people like Smith step aside this corruption flow, it is also very rare. Might the later be product of an external, yet hidden circumstance of “sort of a disgruntled employee”?

Melissa Garcia said...

I think this is just sad. To know that companies like Goldman Sachs that ‘revolved around teamwork, integrity, a spirit of humility, and always doing right by our clients” have become corrupt and lost their sense of humility and morality.
It is also sad to see a man who have worked for such company for 12 years, and have been loyal and successful, turn his back and speak the truth about the company that homed him for so long.
It is a good thing though, and I hope others who live in this corrupt system follow Greg Smith’s path; and turn their back to such immorality and denounce it. To stand up against it and open their arms to the truth. It is the only way.

JordanF. said...

I knew something fishy was going on about major corporations, but to think it is a reality makes me wish I did not had to find out this way. Just by seeing the grim smile on the face of the CEO in Goldman Sachs I can already start having suspicions, and irrefutably these suspicions are true. How can the company say that they don’t value their clients when that is what has put the company to run— the help from the contributions of its clients.
I believe that back in the days some companies really took into consideration the client’s benefit, but now that culture has changed like Greg Smith has said about the Goldman Sachs company. The integrity and morality of the company changed, and it became solely to feed on the money of the clients (an act of pure selfishness). It surprised me that nowadays no company has a true culture, and many of the corporations now refer to the people as mere “muppets”. All the lack of values now makes me look at companies like Goldman Sachs as absolutely shameful, and my question is who can we trust? no one.

Ana Martin said...

It doesn’t surprise me that a large company such as Goldman Sachs is being corrupted by their own people. I believe that there is some form of fraud in every one of the companies in our time. I also believe that every employee, from the CEO to the receptionist in the front desk, think that without this theme of deception such firms will not succeed. It is expected from a company to advise you on what is best for your specific situation and trust that they will help you. However in reality, they don’t care about you or your money, they just care about they will gain from you. It is sad to know such things because there is a sense of trust between client and employee that is being broken; a trust that should be the main foundation of these corporations. I believe the world is so deep in corruption that it has reached the point of no return.
In all this darkness, I find it admirable of this man to renounce his job because of such reasons. However I don’t trust this man completely because he was part of the fraud at some point as well. Who knows if he will comply with the same situations for the next company he works for? This post has made me realize that we need to question everything we do and trust very few people.

Angela said...

If something angers we more besides the fact that Goldman Sachs is a corrupt company whose purpose serves to rip off its clients in order to maximize its profits is the fact that the Unites States government hasn’t moved an inch of a finger to do absolutely anything about the matter. Why is it that this company is still running? Why isn’t the CEO being criminally charged? And most importantly why the heck did the United States government gift them with a $10 billion dollar bailout using the Americans taxpayers money?!?! So that they could later decide to fire one thousand American workers and take those jobs to Singapore where labor is much cheaper. Sometimes I am amazed at how no one does anything about nothing in this country. No one protests and no one seems to care. The only group of people who tried to do something about this and many other matters was the Occupy Movement and sadly they were looked down and portrayed by the media as just some young, teenage, non working, weed smoking fools. I don’t know where all of this corporate greed is going to take us, I surely don’t know if justice will ever prevail and there be a day when all of these greedy self-centered corporate “business men” be locked up in jail but I do know that I definitely believe Greg Smith and I applaud him for having the courage to write such letter.
(Angela Rodriguez-Martell)

Nathalia Aldana said...
This comment has been removed by the author.
Nathalia Aldana said...

We have come to accept this type of behavior from businesses. Everyday they plan strategic ways to get our money and to make profit from every decision they make without the customer’s needs being catered to. From my personal experience, I have worked in an international phone service company offering products to other businesses and people around the world, and I have never been in a meeting where customer’s benefit was the order of the day. Businesses, like the one I work for, are desperate to earn the most profit from investing less in quality and customer satisfaction. Unfortunately, anything I, as representative say, to make it better for the customers is taken less into consideration as the economy worsens. However, I do not blame these companies for sacrificing integrity and product responsibility. After all, they did invest their money and time in developing their products and services for many years in order to establish themselves in the market. In my opinion, I think that we need more people that still care in those executive positions, people who won’t quit and will stand up to the big dogs who seem to have lost their moral values. As for us, the consumers, we could help by boycotting those services and educating other people about alternative options.

Cindy Salinas said...

It doesn’t surprise me that a large company such as Goldman Sachs is corrupt. It is just a little shocking to know that this is actually a reality. Especially if its describe as the company that “ revolved around teamwork, integrity, a spirit of humility, and always doing right by our clients. The culture was the secret sauce that made this place great and allowed us to earn our clients’ trust for 143 years.”

My question is, why after 12 years Mr. Smith finally decides to tell the “true”? And how do we know if that’s all true or if there is something else. What were the reasons for this “speaking the true event”? Why didn’t he speak earlier, was it because he was part of the fraud, and now because he is leaving Goldman Sachs he decides to talk and wash his hands as Pontius Pilate did?
Here, I wonder what the turning point between honesty and corruption is. Everyone seems to have a "number”, a digit in which profit seems to overcome all sort of honesty.
So now, who could be sure that this man would not do the same in the next company he works for? Will he be quite for another 12 years?

Jose Carvajal said...

I have seen Wall Street brokers play with money, sell toxic investments, and even “steal” money from tax payers without penalty. I have not heard of a CEO being imprisoned because of his acts against the well-being of our economy. It is incredible the level of impunity they have, and it is provided by our legislators. Oh, I forgot to mention that these CEOs are lobbyists who pay for our legislator’s political campaign.
Lloyd Blankfein accuses his own company of what is called inside trading because the bank is trying to sell toxic waste, which is no longer profitable to them, to a customer who does not have that information. The banks are playing a Zero Sum game where one group loses and the other wins. Obviously, we already know which group is the winner.

Dayron Leon said...

Mr. Smith defines hypocrisy when he writes that in past years Goldman Sachs revolved around “teamwork, integrity, a spirit of humility, and always doing right by our clients”. For Christ’s sake, when in the world has a bank been interested in helping those in need? Honestly, I have always believed that as soon as you step into a bank, you delve into a world of dollar signs, numbers and interest rates. In my opinion, Smith falls under the category of people who see the present as the constant erosion of a perfect past, existent only in the restrictive boundaries of their mortal minds. In reality, Goldman Sachs, just like any other bank out there has always been interested in the profits and the profits alone. If they would have been the humble institution, filled with warm and affection towards costumers, then they would have pumped money out of their arcades to feed the homeless during the Great Depression. Instead, they watched from above as the lives of millions turned upside down, as dreams shattered and as fridges emptied throughout continental United States. I’m sorry Mr. Smith! You may call me a pessimist but I find it extremely hard to comprehend that it took you over twelve years to realize that Goldman Sachs didn't care about the welfare of costumers.

Dayron leon said...

Mr. Smith defines hypocrisy when he writes that in past years Goldman Sachs revolved around “teamwork, integrity, a spirit of humility, and always doing right by our clients”. For Christ’s sake, when in the world has a bank been interested in helping those in need? Honestly, I have always believed that as soon as you step into a bank, you delve into a world of dollar signs, numbers and interest rates. In my opinion, Smith falls under the category of people who see the present as the constant erosion of a perfect past, existent only in the restrictive boundaries of their mortal minds. In reality, Goldman Sachs, just like any other bank out there has always been interested in the profits and the profits alone. If they would have been the humble institution, filled with warm and affection towards costumers, then they would have pumped money out of their arcades to feed the homeless during the Great Depression. Instead, they watched from above as the lives of millions turned upside down, as dreams shattered and as fridges emptied throughout continental United States. I’m sorry Mr. Smith! You may call me a pessimist but I find it extremely hard to comprehend that it took you over twelve years to realize that Goldman Sachs didn't care about the welfare of costumers.

Daphne Eckembrecher said...

Most of the companies in this economy are not perfect like most individuals that manage the company. Honestly, I am not surprised that corruption is present in such a big firm such as Goldman Sachs because of so many individuals working in this company. I think it is great that Lloyd Blankfein after working for the company for a great amount of time, he decided to leave the company because he wasn’t agreeing with the way the company was functioning though at the same time I believe it wasn’t really professional for him to expose the company nationally because at one point of his trajectory the firm was who helped him learn and acquire the knowledge he needed in order to grow and become a CEO. Sincerelly, I think that in this world corruption isn’t going to decrease but instead increase because like I stated earlier, we aren’t perfect and individuals usually always look of for their own benefit.

Francelia Eckembrecher said...

I honestly don't know what to say other than people have turned from caring about others to just caring about themselves and their well-being. There is a lot of corruption happening and people are gaining benefits from others lost. I believe that companies such as Goldman Sachs have lost integrity and don't care about the consumer. When it comes to Lloyd Blankfein I think that his resignation was very admirable because not many people would resign and expose them to the public. I also think that we have begun to accept this behavior because we don't do anything about it. If there were more people that would care about the well being of all and not just themselves we wouldn't have all the corruption that we see now a days.

Anonymous said...

Slowly over the years values and morals have degraded not only in society, but in corporations like Goldman Sachs as well. People tend to want to confide in businesses even though they know they shouldn't. They want to believe that the people they go to for financial advice will give them the better option, but with what the article states it is not the case anymore. As human beigns we should help each other to reach our maximum potentials, not deflate any hope there is left in the benevolence of our humanity. Things in the company will change only if the mentality of those in it changes.
Iliet payan

Juan Cardona said...

The truth is that money can change the way people think, act, and
interact with others. Money can completely destroy people’s morals,
making them forget about the value of fairness and justice. As a
matter of fact we can see exactly how even a big company like Goldman
Sachs, (which revolved around teamwork, integrity, a spirit of
humility, and always doing right by their clients) can have a sudden
change of heart; screwing their clients over just to get more money.
It is not surprise that this company is corrupt, powerful companies usually do whatever it takes to get more and more money. It’s almost like if it was a part of society, even people who win the lottery never end up happy, some way or another money destroys their lives.