Goldman Director resigns and lets it all hang out

[ls99]

Ripping off clients? What else is new?

 

[Gone4Good]

My DW (not quite a VP yet) shares a cube with a VP at a different I-bank - that should tell you the level VP's are at in i-banks.

Congrats!

Don't worry, you'll see her again eventually.

 

[Finance Dave]

there goes the name calling...can't say that surprised me.

Good info though on his level being lower than I had thought. I'm a Director at my MegaCorp, and I'm considered to be a "senior" executive...but the word "senior" doesn't mean what you think. Here's a better way to think of it...

We have "salary grades" from 3 (no college degree, no experience) all the way up to 13 (Vice President and Officer). I'm a 10. You can decide for yourself where that puts me...it seems Goldman uses titles differently than we do. I would estimate we have around 40 VPs in our corporation, and we're a Fortune250 company with about 45,000 employees.

 

[Gone4Good]

there goes the name calling...can't say that surprised me.

Who's calling names?

 

[ziggy29]

I have trouble taking seriously a critique of 143 years of culture at the firm ....

Does that include 143 years of a culture that gives thousands of its junior employees the title of "vice president"?

 

[Gone4Good]

Does that include 143 years of a culture that gives thousands of its junior employees the title of "vice president"?

It's a "Street" thing.

Nascent Masters of the Universe start their careers at a place most mere mortals can only aspire to.

 

[Texas Proud]

there goes the name calling...can't say that surprised me.

Good info though on his level being lower than I had thought. I'm a Director at my MegaCorp, and I'm considered to be a "senior" executive...but the word "senior" doesn't mean what you think. Here's a better way to think of it...

We have "salary grades" from 3 (no college degree, no experience) all the way up to 13 (Vice President and Officer). I'm a 10. You can decide for yourself where that puts me...it seems Goldman uses titles differently than we do. I would estimate we have around 40 VPs in our corporation, and we're a Fortune250 company with about 45,000 employees.

Banks and investment banks are a lot different than regular corps....

I bet there are 45K VPs or higher at a place like Citi, Wells or JPMorgan...

 

[ChiliPepr]

I'm a Director at my MegaCorp, and I'm considered to be a "senior" executive...but the word "senior" doesn't mean what you think. Here's a better way to think of it...

We have "salary grades" from 3 (no college degree, no experience) all the way up to 13 (Vice President and Officer). I'm a 10. You can decide for yourself where that puts me...it seems Goldman uses titles differently than we do. I would estimate we have around 40 VPs in our corporation, and we're a Fortune250 company with about 45,000 employees.

In an I-Bank, a VP is lower than a Sr VP (and I do not believe GS has Sr VP's), which is lower than a Director, which is lower than a Managing Director, which is lower than an Executive MD.

In many industries a VP is higher than a Director, but not in Banks... I think it may be because hey want anyone that meets with a client to have at least VP on their cards...

 

[FUEGO]

Congrats!

Don't worry, you'll see her again eventually.

Ha ha - she's not one of the high paid wall st types - merely a back office employee earning relatively mediocre peanuts (with great benefits!), and works her 40 and logs out. She picks the kids up from school at 3 every day.

 

[clifp]

I know the Borowtiz response was a satire, but it ran pretty true. At various times I've owned Goldman Sachs stock, my theory was you if you can't beat them join them. On the morality scale I put Goldman one step above DeBeers and perhaps two steps above Enron, and most Russian firms and well below most other companies.

I've pretty much always expected Goldman employees to be smart, greedy, bastards who make a lot of money first for themselves, and some of it trickles down to the shareholders. Most clients existed solely to be fleeced, and I depend on the cunning of the GS employees to convince the clients that they are getting a good deal.

Mr Smith going to Goldman seems as charmingly naive, as Mr Smith going to Washington. My guess is that not much has changed at Goldman culture over the last 12 years (certainly it sounds no different than Goldman Lewis described in Liar's Poker) it is just his exposure and awareness of the reality of the firm has increased. I suspect that most client know that Goldman is ripping them off, but just like nothing is more expensive than 2nd best lawyer, I figure clients are willing to pay for the smartest [-]crooks[/-] investment bankers.

I hope Mr Smith has LBYM and can ER at young age, no way I would hire him. I also hope that GS does a better job of making sure that their new hires check their conscious in at the door in the future.

 

[REWahoo]

... new hires check their conscious in at the door in the future.

I've heard of brain-dead employees, but this requirement is over the top...

 

[ERD50]

Does that include 143 years of a culture that gives thousands of its junior employees the title of "vice president"?

I'm guessing that the whole VP thing centers around certain requirements that many of the transactions they do must be performed by an 'officer of the company'?

I can recall a vendor informing us of an upcoming disruption in their supply chain, but if we could provide a 'letter of intent', even w/o signed purchase orders, we could assure that a certain amount of supply would be allocated to us. The 'letter of intent' had to be signed by an 'officer of the company'.

Lying, cheating & stealing are far more common now than they were when most of us were kids, no comparison...

I don't know if you are right or wrong, but what do you base that on? Personally, I kinda doubt that thousands of years of human nature has changed much in just 50 years, and in many ways, there are more controls and transparency in place today. I think lying and cheating may be harder to get away with in many cases today.

-ERD50

 

[ziggy29]

I'm guessing that the whole VP thing centers around certain requirements that many of the transactions they do must be performed by an 'officer of the company'?

Or helping their young junior personnel get dates by handing out business cards, I was thinking...

 

[ERD50]

Or helping their young junior personnel get dates by handing out business cards, I was thinking...

Two birds (so to speak) with one stone?


-ERD50

 

[Gone4Good]

Or helping their young junior personnel get dates by handing out business cards, I was thinking...

More typical to stuff $20's in g-strings.

 

[W2R]

Based on what I read, he's very young? Does anyone have a link to a photo of him?

I think this is him. The photo is from the article at the link.

Greg Smith resignation letter: Goldman Sachs exec quits over firm's 'toxic' culture | Mail Online

 

[pb4uski]

He says "Call me old-fashioned, but I don’t like selling my clients a product that is wrong for them. .... Find yourself sitting in a seat where your job is to trade any illiquid, opaque product with a three-letter acronym."

I guess that Greg does not have a future in insurance either.

 

[ERD50]

So I finally read his letter. The only thing that strikes me as more pompous and self-righteous than that guy is the choir of responses in the 'comments' section

Geez, I could say many of the same things about the MegaCorp I retired from, they lost their way, didn't have the same values, etc. But I didn't write a letter to the editor, I just got on with my life.

Many companies try to up-sell the customer. This is news? What car salesman doesn't try to steer you to the higher model, or real estate agent to a larger house, or just about any business?

What I really hear form this guy is that their clients are stupid. I mean, I don't expect to go to a Chevy dealer and have him tell me that a certain model Ford would be best for me. It sounds like the clients are buying products from the same people who are advising them. If that doesn't scream 'conflict', I don't know what does. Caveat Emptor.

-ERD50

 

[modhatter]

"he has dedicated his life to doing the Lord’s work."

Oh my. That ought to change everyone's mind. No one could be a crook while doing the Lord's work.

 

[traineeinvestor]

Mr Smith sounds like a disgruntled loser. The bottom line is that banks (like all other businesses) exist to make money for their shareholders and it is disengenuous (to say the least) to claim that there is a problem with that. Quite frankly, I would be very worried if banks were not seeking to make a profit out of their dealings with their customers and counterparties - the negative implications for the stability of the financial system and our own savings and investments would be significant.

As to the way in which Goldman (or any other business) goes about making those profits, there are really only three restraints - legal and regulatory issues, customer relations and reputation. Mr Smith focuses on the customers. Given that the products that Mr Smith's business unit was dealing in are sophisticated products which (I understand but have not been able to verify) are only offered to large sophisticated investors, the customers should be able to look out for themselves. Wilbur Ross's comments Wilbur Ross Sees No `Sea Change' at Goldman - Bloomberg that he has seen no "sea change" at Goldman is more credible than the views if a disgruntled mid level employee who is clearly happy to burn his bridges with the financial universe. Who would hire him after this? Lastly, it goes without saying that if customers were consistently losing money on the products being sold to them, presumably they would stop buying them. If customers thought they were being misled or missold products, they would either sue or complain to the SEC - something which unhappy customers routinely show a willingness to do.

While I am sure that, like all businesses, Goldman has its share of issues, Mr Smith's letter is more damning of Mr Smith than of Goldman. Unlike Frank Partnoy's FIASCO, I see nothing of merit (or even interest) in Mr Smith's letter.

Disclosure: I have an interest in Goldman

 

[Helen]

What is surprising to me is that anyone would be enlightened by his letter.

 

[Finance Dave]

Who's calling names?

See below. Disgruntled and naive.

Oh, make it stop. It's too funny.

But it does explain a lot . . . how young he is, why someone would be disgruntled at still only being a VP after 12 years, and the naivety with which the article is written.

 

[Finance Dave]

I think this is him. The photo is from the article at the link.

Greg Smith resignation letter: Goldman Sachs exec quits over firm's 'toxic' culture | Mail Online

Thank you.

I see even some of you don't appreciate his going public.

 

[Finance Dave]

What is surprising to me is that anyone would be enlightened by his letter.

I don't think enlightened is the word I'd use...but I think it's refreshing that someone is willing to say what actually goes on rather than being paid "hush money" to go away and be quiet.

I do wonder, however, just how hard he tried to change things while there. That, IMO, is the true test of courage...to stand up for what you think is right in the face of doubters and opposition.

 

[Finance Dave]

Mr Smith sounds like a disgruntled loser. The bottom line is that banks (like all other businesses) exist to make money for their shareholders and it is disengenuous (to say the least) to claim that there is a problem with that.

You must have read a different letter than the one I did. He clearly stated that he did not have an issue with them trying to make money. His issue was that they were trying to make money at the expense of the very customers they were supposed to be serving.

As to the way in which Goldman (or any other business) goes about making those profits, there are really only three restraints - legal and regulatory issues, customer relations and reputation.

Well, I sort of disagree with this, but maybe you consider this part of reputation...I think ethics should be a fourth. If you consider ethics part of reputation, then fine...we agree. IMO the ethics were violated, if you believe what he said was true.

Lastly, it goes without saying that if customers were consistently losing money on the products being sold to them, presumably they would stop buying them. If customers thought they were being misled or missold products, they would either sue or complain to the SEC - something which unhappy customers routinely show a willingness to do.

If it goes without saying, you would not have said it...but I'm glad you did. Customers may not always know that they were getting the wrong end of the deal. Let's say I had a coin that I had no idea of the value. You, an expert came in and told me it was worth $50 even though you knew it was worth $100. I had expected that it was only worth $20...so I gladly took $50 from you. Then, you went out and sold it for $100. Seem ethical to you? You could argue that the seller should do their own research and beware of the buyer...I'll accept that. But it does not forgive the deceitful buyer for misleading the seller.

Mr Smith's letter is more damning of Mr Smith than of Goldman.

You're entitled to your opinion...but I disagree...we'll find out over time what the customers of Goldman think. It's obvious you, as a customer, are not going anywhere.