March 26, 2012

Is Greg Smith of #GoldmanSachs really a 'hero'? Maybe not

Oh, sure, everybody from the often-combative Matt Taibbi to a fair degree closer to the center of the political spectrum is touting the "brave departure," as Taibbi calls it, of the former Goldman Sachs executive director, chronicled in his own words in a New York Times op-ed.

But, does everything he says stand up? Especially about his own valor or whatever?

People who read here regularly know that I'm not going to bash him from the right, unlike the Wall Street Journal and many others.

But, let's take an honest look at what Greg Smith says in his column.

First, he blames this all, at least by implication, on current GS CEO Loyd Blankfein.
When the history books are written about Goldman Sachs, they may reflect that the current chief executive officer, Lloyd C. Blankfein, and the president, Gary D. Cohn, lost hold of the firm’s culture on their watch. I truly believe that this decline in the firm’s moral fiber represents the single most serious threat to its long-run survival.

This stuff, including trading AGAINST toxic alphabet soup derivatives inside the company, was happening when Henry Paulson was still the head, before he became Bush's Treasury Secretary.

That means this claim:
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.  
Is pure bullshit.

No, it doesn't sound "surprising"; it sounds "dubious," "incredulous" or other things.

Second, he didn't become an executive director yesterday, nor could he have been totally naive about the already-changed-under-Paulson culture until after he became an executive director.

So, to riff on Watergate:

What did you know, Mr. Smith, and when did you know it?

Third, the culture had changed even before Paulson was CEO. It had changed even before Smith was hired. Ever read about the repeal of Glass-Steagall, Mr. Smith?

Ever hear about Alan Greenspan, et al, including people in government with GS connections, refusing to countenance regulation of derivatives, way back then, even? The derivatives which you were apparently still selling?

Combining both points two and three, one must wonder if Mr. Smith is engaged in apple-polishing and character-polishing as much as he had a real crisis of conscience, if not more.

That, in turn, makes this statement of his ironic at least:
Today, if you make enough money for the firm (and are not currently an ax murderer) you will be promoted into a position of influence. 
So, is that how you got promoted? And, did you metaphorically become a Lizzie Borden there, or just why are you leaving?

And (update, March 26) what did you know about stuff like this — alleged short-sheeting short-trading clients?

Until I learn more, and until Greg Smith talks about donating, say, 25 percent of his profit on derivative sales to charities for the needy (not ADL as a nonprofit) my response is:

Cry me a river.

Don't get me wrong. I'm all in favor of some insider exposing details of still-ongoing duplicity at Goddam Sachs. But, let's not give the messenger a halo; to riff on the ax murderer line, if the messenger needs to be shot after he delivers the message, then shoot him!

More seriously, I hope some magazine does a long-form story about this, including people who entered Sachs about the same time as Smith, worked with him, etc. Let's hear the backstory.

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