Wednesday, March 14th, 2012

The Goldman Sachs Op-Ed

Everyone online is sort of sniffing at the already-infamous "Why I'm Leaving Goldman Sachs" op-ed in today's Times, and much of that sniffing is understandable. Lots of people definitely know, assume or simply believe that Goldman has been for much of the last decade (or longer) in the service of steering their clients wrong in favor of profits. This is a totally reasonable (and valid!) conclusion, after all, after the activity of the last five years. (Particularly for anyone who saw their incredibly terrible returns on investment after ill-timed BRIC-chasing and plenty of other recession-era disasters.) And so their point is: well, what were you doing, Greg Smith, staying there for so long while it all apparently went so wrong? What were you doing to steer the culture away from being bad advisors and pigs?

That reaction has… some truth to it. Some of these scoffers are not wrong. Goldman, meanwhile, is doing its part to undermine him. But all the scoffing overlooks a few facts.

When Greg Smith writes about the culture of Goldman—"teamwork, integrity, a spirit of humility"—those are not just empty words. They sound funny from the outside, sure! But "the Goldman way" was drilled into employees and executives in a way that likely has no other workplace equal in intensity outside of perhaps the Marines or the Symbionese Liberation Army. Being self-effacing; saying "we"; sharing credit; posting your working group on developments: people who bucked this process were beaten down until they conformed.

This culture—which also highly valued do-gooding and public service, or at least the ideas of such—is pretty much just brainwashing. (Not bad brainwashing particularly! But all the same.) That state prevents employees from realizing that Goldman's history of making money at any cost might have always been a part of the culture of the firm.

And you can see how he's internalized this brainwashing.

While people in media and other fields are constantly flouncing out and making dramatic pronouncements about the evils of their former employers, breaking publicly with the firm is so completely outside the boundaries of what's conceivable that this deserves a little more respect that it's getting. (Although, true too: it would have been nice if he'd been a bit more specific. For him, these are bomb-throwing words; for us, it's hard to cut through his op-ed to find the meat of the matter. There's not so much there beside his actual declaration of being betrayed, right?)

Still, the criticism also overlooks the departure agreements and the like: the contractual leg of the deep culture of privacy. When people depart the firm—willingly or unwillingly—the enormous agreements, obviously, forbid people from speaking about the firm. (In fact, the termination agreements for layoffs said that former employees would forego any promised compensation not just if they spoke about the firm in any way but would forego payments in a number of other circumstances, including just being charged with a crime.) While I'm sure Smith isn't in the slightest hurting for money, he is now considered the ultimate traitor.

This is a firm that researches its opponents as deeply as any mafia. This is a firm that thinks nothing of sending a former programmer to jail because he was trying to back up some opensource software and included chunks of what the firm considered proprietary software; they stopped at nothing to ruin him along the way. This is a firm that's been nearshoring in Utah for years, so as to capture a highly immobile and not coincidentally highly moral worker population. This is a firm that got vast, disgusting concessions from the City of New York because they pretended they were going to move out of downtown—and then, even after receiving them, expanded their New Jersey headcount, due to more concessions on the other side of the river. This is a firm that practices surveillance-level research on its negotiation counterparties, and has no qualms about bringing their information and forensics to bear in negotiations.

While many of us feel like this is just another tardy confirmation of what we all already knew—which, well, it is!—this is still incredibly damaging for the firm. Goldman's reputation right now is, rather deservedly, fairly terrible. Anyone who's previously worked there who's brought up their former employer in public has been, over the last two years, subject to actual face-to-face scorn. (Which is probably for the best! Society should shame those who damage it!)

But the venue of the Times gives rich people—actual Goldman clients, who don't read Rolling Stone, or our stupid blogs and snippy Twitter accounts—something to have their assistants print out. They'll actually read this, and they have phones on their private planes to call their friends.

Meanwhile, the Internet will do what it does best.

46 Comments / Post A Comment

barnhouse (#1,326)

All true, plus this: pretty much every single person on Wall Street will have to confront the reality of one of their own voicing the tiny, quiet suspicion he's been hiding from himself all the time.

@barnhouse : Those tiny quiet suspicions are surprisingly easy to stifle with fistfuls of cash.

barnhouse (#1,326)

@Gef the Talking Mongoose Exactly!! Which is why it is so weird that this even happened in the first place.

@barnhouse : Follow the (lack of expected) money. You don't post your CV unless your bonus sucked.

barnhouse (#1,326)

@Gef the Talking Mongoose haha yikes, that is a little too cynical even for me. Plus why wait so long?–bonus time was months ago.

katiebakes (#32)

@barnhouse bonuses likely hit bank accounts about five-six weeks ago, give or take… he probably took the meantime to get his affairs in order or whatever, and write the damnthemanifesto.

Choire, loved this!

@barnhouse : Given the (for now) total lack of context to Smith's resignation, we're basically engaging in Kremlinology here. The subjective-undercompensation theory is just one end of a spectrum of possibilities. Heck, he could have had some sort of drastic religious conversion, for all I know.

All things being equal, though, I try to go with the cynical explanation until further evidence tips the scales.

@katiebakes : Agreed. Dunno about Goldman specifically, but in at least one major financial institution, the numbers go out mid-February with actual cash in hand by the first week of March.

barnhouse (#1,326)

@katiebakes yeah, but surely he knew the number in December? If he was plain disgruntled, he would have just packed up his marbles, you would think. This is a really scorched-earth departure from the whole industry, I mean, it's so extreme. @Gef haha Kremlinology, too right. I SOOO hope we get to find out about the religious conversion, whatever it was.

@Gef the Talking Mongoose : I asked around a bit and was informed that Goldman's bonus day was January 19. The Internet confirms, and also points out that it sucked badly across the board.

barnhouse (#1,326)

@Gef the Talking Mongoose ?? that is interesting. A lot of them tell in December, though they don't get the actual dough until sometime in the first couple of months of the year.

StevieD (#5,365)

CHOIRE how did you not mention the PING PONG?! That was the most egregious part of it!

Rollo (#3,202)

@StevieD TAGS!

I hate to skirt so close to Godwin's Law but this does bring to mind Sebald's observation that (to paraphrase but only just) German soldiers would rather have murdered women and children than put up with the derision and scorn of their colleagues that they would have gotten if they put in for a transfer. My point isn't that bankers are Nazis (…) but that peer pressure is extremely powerful.

Matthew Phelan (#10,133)

@My Number Is My Address This is a tangent, but I figured you'd like it.

"As an institution gains hegemony, the probability of a satirical article comparing it to the evil galactic empire from Star Wars approaches 1."

(According to a cursory Google, I may get to claim this Godwin's Law corollary.)

cuminafterall (#163,544)

I just wish the NYT would let me put my entire resume in their Op-Ed section, too.

Joey Camire (#6,325)

@cuminafterall That was one of my big takeaways as well— rhodes scolar, fabulous lover, killer carbonara, huge cock.

jolie (#16)

To echo (one of) Choire's sentiments: I wish he'd spent more time describing the incident or incidents that led to this – because please there's no way IN HELL that there weren't actual precipitating events beyond just a growing malaise with Goldman's culture – instead of regaling us with his entire CV. OTOH, if he'd not regaled us with his entire CV I wouldn't have gotten to chuckle heartily over this gem while enjoying my morning coffee, "I was selected as one of 10 people (out of a firm of more than 30,000) to appear on our recruiting video, which is played on every college campus we visit around the world."

BRB, gotta go snicker for another ten minutes. Dear God, is that ever funny.

turd_sandwich (#5,660)

@jolie think we'll know about any actual or fictional beefs in 3, 2, …

turd_sandwich (#5,660)

thanks for this. anyone who says "what were YOU doing?" has never tried to swim upstream in a well-established bureaucratic environment. this was pretty brave, imo.

ericdeamer (#945)

@turd_sandwich Yeah but no one's FORCING you to be in said environment is the point. If you can't actually change or whistleblow can't you at least, like, leave? The fact that you're getting paid a gazillion dollars a year to do stuff that ended up destroying the economy makes just choosing to stay there morally suspect, at least from the perspective of a poor person who can't even conceive of having these options.

turd_sandwich (#5,660)

@ericdeamer fair enough. i am thinking about this from the perspective of someone stuffed into a non-profit and who never has made enough money to stop working.

this all said, it's really hard to discount human psychology in this whole thing, and it's impossible to tease out Smith's motivations for writing the op-ed. i know everyone's hopping mad still, and i am, too; those emotions don't make things one way or the other, though.

jfruh (#713)

From my outsider perspective, the financial industry in the crisis era basically been defined by three nesting dolls of screw-overs. There's the way that finance in and of itself fucks up society as a whole (debatable, I know, efficient allocation of capital, blah blah, but not all of it's good); there's the way that firms screw over their own customers to make money; and there's the way that individual employees at firms loot their own institutions, manipulating things so that illusory short-term profits can be laundered into actual lucrative compensation for the manipulators and setting up disaster for the firm just a few quarters further down the line.

Smith is complaining about #2, and conflating it with #1, which were probably every thus. #3 is the thing that brought us to the bring of disaster, though.

Morbo (#1,288)

Talk to some of the old timers from Goldman before they went public in 1999, and they will tell you that is when the culture of the company changed.

This guy was hired after that took place, but maybe some institutional knowledge and corporate conscience still remained.

NeonTrotsky (#2,249)

@Morbo While 1999 is also when Hank Paulson took over the firm, I would point the passing of Gramm-Leach-Bliley as the real watershed moment, as from then on financial regulations decreased and regulatory capture by the financial industry increased.

What tell-alls like this don't reveal is how much the change in corporate culture Smith decries is framed by changes in the law and regulatory structure that allowed bank[er]s to act with impunity w/r/t clients and the public at large.

barnhouse (#1,326)

@NeonTrotsky YES. Say on.

Morbo (#1,288)


There is a longer term horizon when you are working within a partnership structure then when you are working for a public company where the majority of your total compensation and reputational risk is decided on a year-by-year basis.

Matt (#26)

I read Rolling Stone to find out how Ronnie Wood feels about being the new "bloke" in the Stones.

petejayhawk (#1,249)

@Matt Spoiler alert: "chuffed."

coalbaron (#11,105)

I'm sure he'll have more to say about his Goldman experience over at Grantland.

KenWheaton (#401)

Regarding specifics or lack of them … how many lawyers do you think went over this at The Times before publication. I was wondering how long this may have been in the works if this is published on his actual last day.

Otto Parts@facebook (#226,466)

It's unfortunate that he quit. If he had been fired none of this would be true.

Art Yucko (#1,321)

Dude Quits Job; Realizes Afterward that Job Probably Sucked In The Larger Scheme of Things

hockeymom (#143)

I was reading it cynically until I got to the portion where he described the three ways GS fucked over their clients to make a profit. He sounded genuinely outraged about that.* I don't think he expressed himself particularly well, but I did believe by the end of the thing he was sincere. I'm sure we'll hear all day today from "insiders" that he's just a crazy loon, who was about to be fired anyway.

*maybe not quite so outraged about fucking over non-clients, but baby steps.

joeks (#5,805)

Yes, please forgive me if I do not consider someone who got rich working in our finance industry as a "hero", full stop. Not to mention that it wasn't until his career ran out of steam, and he got a small bonus (this was a bad year for bonuses at GS, apparently), that he came to that realization.

Sorry if that's "counterintuitive", but fuck this guy, and his colleagues. If he wants to be a hero he can give away his money first, then we'll talk.

Art Yucko (#1,321)


wss233 (#226,497)

@joeks Yeah FUCK that guy. "I participated in evil shit for years and helped destroy our economy and now I'm rich beyond my wildest dreams. But I guess all that shit I did (and profited from fantastically! ) was really pretty evil, so other people should stop doing it now."- Greg Smith, asshat.

I'm supposed to commend this asshole for saying the obvious truth? He's "brave" because he risked having to endure some mildly resentful looks the next time he decides to play golf at the club rather than on his private golf island? FUCK that guy. Those deals he was "outraged" by? They pumped the bonus pool, baby.

Greg Smith for Governor of New Jersey, 2014. Greg Smith for Treasury Secretary, 2012 (the people's champ!). General Strike, May 1. Can't wait.

Mr. B (#10,093)

So people actually read the Op-Ed page, huh? This is all so interesting to me!

first as a summer intern while at Stanford

He must have been poor.

growler (#476)

Hey, read this one too, from a guy who had dealings with GS back when they were still a privately held partnership:

johnjoi22 (#226,563)

i like

Whitney (#7,599)

I guess I'm just not so cynical I want to tear this guy down? The impression I got (aside from his resume) was that GS may have been stepping on everyone else, but was working in their clients' best interests. And if that's gone, then it's no longer a business that happens to have ruthless tactics, it's a scam/con/front/etc.

ruth6ghamo (#226,248)


yevet0coba (#226,302)


roberlee (#226,798)

great info posted in this post!

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