Goldman Sachs Executive Quits, Calls Bank Morally Bankrupt

Greg Smith, who is departing his post as Director of U.S. Equity Derivatives in Europe for Goldman Sachs, is leaving the firm today after 12 years. He has decided to write a New York Times Op-Ed that will make sure he is not welcome at the firm anytime soon.

In his op-ed Smith takes the firm to task for turning from a culture that put its clients needs first to a firm that only exists to satisfy its own greed.

He writes,

“[T]he interests of the client continue to be sidelined in the way the firm operates and thinks about making money. I truly believe that this decline in the firm’s moral fiber represents the single most serious threat to its long-run survival.”

The Goldman Sachs of today not only places little concern in the needs of its customers, says Smith, who is based in London, but internally mocks them.

“I don’t know of any illegal behavior, but will people push the envelope and pitch lucrative and complicated products to clients even if they are not the simplest investments or the ones most directly aligned with the client’s goals? Absolutely. Every day, in fact.”

Smith is not without his detractors who point out that Smith is also starting his own investment firm as he leaves.

Conservative opinion writer David Frum tweeted,

“Nice of NYT to give Mr. Smith such a prominent ad for his new financial firm,” .

The New York Times is quick to point out that there may not be much in the way of consequences for Goldman Sachs, but Smith’s column does have the power to open a can of worms.

The New York Times writes,

“The way he resigned from Goldman Sachs, and what he had to say, could reignite a debate over how much Wall Street has changed in the wake of the financial crisis.”

Do you think that Smith’s oped will have any effect on Goldman Sachs?