Questions are now being raised as to whether Goldman Sachs’ chief executive can survive the public resignation of a London-based manager who attested that he could no longer work there “in good conscience”.
Greg Smith, who headed the US investment bank’s equity derivatives business for Europe, the Middle East and Africa, quit in an email message that he sent to his bosses but also copied to The New York Times. It was then published as an open letter.
In the missive, the South African-born Stanford University graduate launched a public attack on Goldman Sachs’ “toxic” culture. He blamed chief executive Lloyd Blankfein and president Gary Cohn for the “decline in the firm’s moral fiber” which, he claimed, represented the “single most serious threat to its long-run survival”.
Smith accused the two men of having “lost hold of the firm’s culture” and said that he knew it was time to leave when “I realized I could no longer look students in the eye and tell them what a great place this was to work”.
He added that staff now had so little respect for others that it was common to hear them talking about ripping off their “muppet” clients and of “ripping eyeballs out”. “I can honestly say that the environment now is as toxic and destructive as I have ever seen it,” Smith added.
Blankfein and Cohn issued a joint statement in response to the scenario, which wiped more than $2 billion off its market value when the letter was published on Wednesday.
A question of survival
They said: “It is unfortunate that an individual opinion about Goldman Sachs is amplified in a newspaper and speaks louder than the regular, detailed and intensive feedback [employees] have provided the firm.”
They added that they were also “disappointed” to read assertions that did “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 our clients”.
But the situation has now raised questions as to whether Blankfein can survive this latest in a series of PR disasters.
Saul Cohen, a retired Wall Street lawyer, told Fox Business News, for example: “If I was placing bets on it, I would bet that Blankstein is likely to be the D’Antoni [former New York Knicks’ head basketball coach] of this spring.”
Since the financial crisis erupted in 2008, Goldman Sachs has been embroiled in numerous probes. This included a US Securities and Exchange Commission investigation that resulted in the firm having to pay out a huge $550 million after one of its brokers was found to have knowingly mis-sold mortgage-related securities.
Blankfein also hurt his own case in 2009 by defending the firm’s compensation practices to the Times, by saying that he was just a banker “doing God’s work”.
