Banker burns bridges, bosses
UNITED STATES: What sort of employee sends a resignation letter so caustic it wipes US$2.15 billion (NZ$2.6B) off the company’s value?
According to friends and a teacher, former Goldman Sachs banker Greg Smith is not a troublemaker seeking his 15 minutes of fame but a man of integrity, high principles and intelligence.
They were speaking after his bombshell public resignation by e-mail to bosses at the investment bank this week.
That e-mail also appeared in The New York Times, allowing the rest of the world to share Smith’s view that Goldman Sachs is a ‘‘toxic and destructive’’ organisation.
The bank has long been criticised as a rapacious, selfinterested institution. Rolling Stone magazine once described it as a ‘‘great vampire squid wrapped around the face of humanity, relentlessly jamming its blood funnel into anything that smells like money’’.
However, it is unusual for an insider to go public about the bank’s culture and Smith’s portrayal of an institution motivated by greed and where traders refer to their clients as ‘‘muppets’’ is highly damaging.
Goldman’s share price dropped 3.4 per cent after the email, wiping more than US$2 billion off its stockmarket value, although the bank had made most of those losses back in early trading yesterday.
According to Elliot Wolf, the retired headmaster at Smith’s school in South Africa, his pupil always had a strong sense of right and wrong. ‘‘He was exceptionally intelligent with an integrity that is probably unequalled,’’ Wolf said yesterday. ‘‘An absolutely remarkable man with high principles. He was an asset to the school in every possible way.’’
Friends of Smith said that his very public resignation had been driven by a desire to make the bank where he had worked for 12 years a better place.
Daniel Lipkin, a lawyer who studied with Smith at Stanford University, said: ‘‘He has a really high moral fibre and really cared about the culture of the firm.’’
Another friend, Lex Bayer, said: ‘‘I think this was the ultimate act of loyalty. He has always been an advocate for the firm, but he
Wall
Street wanted Goldman to do things the right way.’’
Smith, a derivatives trader who is thought to have earned US$500,000 a year, said in his resignation letter that the bank no longer cared about its customers and that colleagues would boast about ‘‘ripping out the eyeballs’’ of customers. ‘‘It makes me ill how callously people talk about ripping their clients off,’’ he wrote.
Although bankers in Wall Street and in the City of London have mostly taken the view that Smith’s comments were nothing they did not already know about Goldman Sachs, the bank’s critics have seized on the resignation letter with glee.
In Britain, Business Secretary Vince Cable said the article had ‘‘inflicted severe reputational damage’’ on the investment bank, which employs 5000 people in London. ‘‘Goldman Sachs will pay the price for it,’’ he said.