The one where Mr Smith doesn’t go to Washington

Did you hear? Greg Smith has left Goldman Sachs…

Yesterday an Op-Ed piece appeared in the New York Times written by a departing Goldman Sachs employee called Greg Smith. In his piece he chose to make some frank observations of his perception of Goldman Sachs and their culture. In response Goldman’s Chairman & CEO Lloyd Blankfein shared two observations that Mr Smith’s observations did not reflect Goldman’s values and that he was not aware of Mr Smith using the anonymous mechanism his firm has in place for employees to raise issues.

One person in my twitter stream questioned the credibility of this letter saying that it was just the groans of a leaving employee and in his blog response Fred Destin suggests that Mr Smith stop demonizing the banks and start thinking about how you can take power away from them.

Having read the original op-ed piece relatively early this morning I was impressed that a) someone had written it and b) that the New York Times had published it. Regardless of that fact that Mr Smith had ‘supped from the Goldman cup’ for 12 years it is my belief you have right up to your death-bed to make a conversion and having seen the light at least he is choosing to attempt to make a personal change. I have no problem with the fact that banks (and commercial entities in general) are in business to make money. No problem at all. What I took away from the piece was the way in which they set out to make money and the respect or lack thereof which they deal with their clients. At no point did I think it was a manifesto for non-profit but maybe a call for a mitigation in success at all costs.

As for Goldman’s response I found that quite amusing. The fact that it does not reflect Goldman’s values was surely the point of the whole thing – the fact that behaviour observed in the firm does not reflect the values hung over the door was in my mind was Mr Smith was getting at. The fact that he didn’t use the anonymous mechanism – well there’s a shocker… surely if he did it would be anonymous and secondly, having made his decision maybe he felt the NY Times would create more impact than his 1 of 30,000 employees complaint. Maybe need to revise that system?

As for the credibility of the letter there I disagree with the person questioning the credibility. Mr Smith is an individual who has a point of view that he has chosen to express. If you don’t wish to give it credence that’s fine but he’s sharing his perceptions from 12 years of employment and as my Occ Pysch professor regularly said ‘reality is defined in the mind of the actor’ – his reality, his views, he got published.

I found Mr Destin’s response very interesting. He clearly has FAR greater insight into an industry I’ve never worked in but surely some of the points he raised in his “oh please” response were the elephants on the table. Should we just accept how bankers are incentivised? Should we just accept how investment banks operate? Maybe, what Mr Smith was trying to achieve was to fuel the fire of changing how banks operate and how you can take power away from them.

In the fall out from the financial crisis there has been lots of talk about changing banking but seemingly little action. With the huge bailouts and mergers now part of the day-to-day reality it does seem that reforming the banking sector and evolving the regulation it is subject to has taken a back burner. If you read my post yesterday you’ll know I’ve been watching ‘Battlestar Gallactica’ recently and a line that appears with regularity in the show is “All this has happened before, and all of it will happen again”. I can’t help thinking that without significant intervention and change we’ll just forget our way out of this and set course for another crisis.

In other big news yesterday Darth Vader decided to leave the Empire. The Emperor has yet to comment although he has requested verification on whether Darth had used the anonymous employee complaints process before exiting…

[Thanks to @Thinkingfox for links to both the Fred Destin blog and the Darth Vader piece]

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