A departing executive of Goldman Sachs investment bankers has tossed a bomb back at his former bosses and Wall Street in general.
In a seething op-ed for the New York Times, Greg Smith said that their rich clients were labelled ‘Muppets’ — meaning fools — and regularly ripped off and sold under-performing or bad investments.
The environment now is as toxic and destructive as I have ever seen it.
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.
The Times says that the industry’s reaction to Smith’s revelations has been “one giant firm after another has publicly proclaimed it is putting clients first.”
On MSNBC, Michael Moore joked about the ’1%’ being ripped off by the ’0.01%’ and urged them to come join the Occupy movement.
On the Colbert Report, Stephen Colbert, the satirist who lampoons conservatives by playing one, compared Smith to Benedict Arnold, the Revolutionary War general who defected to the British Army and whose name became synonymous with betrayal.
In a British version of The Onion, the Daily Mash, the news was compared to Darth Vader quitting the empire:
The Empire today has become too much about shortcuts and not enough about remote strangulation. It just doesn’t feel right to me anymore.
Some are calling Smith a ‘whistleblower’ and — as has happened with others — Goldman Sacs were quick to label him just a ‘disgruntled employee.’ The financial media has openly mocked Smith, calling him ‘Judas’ and reporting anonymous attacks on him, quoting “people familiar with the matter” saying that Smith was angry with the size of his bonus and his lack of promotion.
But Smith’s revelations are already having real implications with attention drawn to Massachusetts Republican Senator Scott Brown’s attempts to weaken restrictions on the abuses Smith talks about. British MPs are saying Smith has reinforced the need for more banking reform. Speculation is rife that CEO Lloyd ‘I’m doing god’s work’ Blankfein may be forced to quit.
The widely respected BBC business editor, Robert Peston, wrote on Twitter:
This attack on Goldman Sachs from resigning exec is astonishing. The damage to the firm could be pretty serious.
Oh, and Goldman Sachs share price is dropping on the expectation of them losing non-’Muppet’ clients.
Picture by BK and EP