Goldman Sachs

[DCG]

Regardless of his position at GS, he sounds like he's being candid and honest.

[Guest Hester]

Is this really a shock to anybody? Goldman is putting their own interests ahead of clients. Especially after all the things they did to clients in 2008.

 

If this is really news to a Goldman client they need to have the naivety flushed out of them.

[Grenville]

Regardless of his position at GS, he sounds like he's being candid and honest.

 

I'd agree.

[Grenville]

I'd also agree that he isn't a managing director or partner. On the other hand, he's been at the firm for 12 years. It's a data point for whatever its worth.

 

I appreciate pointing out the confirmation bias, I'm a bit biased.

[JSArbitrage]

I don't even see why his seniority is relevant.  You don't have to be at the top of the pyramid to know if you are fleecing a client.  In fact, it'd probably be more likely that the lower you go, the more likely you are to see it.  I am sure this kind of thing gets filtered out the higher you go for obvious reasons.

 

 

[Grenville]

"Goldman Sachs CEO Lloyd Blankfein and President Gary Cohn responded to Greg Smith's public resignation on Wednesday in a letter to the firm's employees.

The letter is reproduced below in its entirety:"

 

http://money.cnn.com/2012/03/14/markets/goldman-sachs-greg-smith-statement/

 

[Kraven]

I am guessing that if a GS employee wrote an op-ed on how wonderful it is to work there and how great the company is that there would be a thread saying how refreshing it is that someone can be so candid and open.

[AZ_Value]

Regardless of his position at GS, he sounds like he's being candid and honest.

 

+1

[COYS]

I think his seniority is relevant, because it provides a bit of context to his remarks.  The fact that he was not a Managing Director after 12 years implies that he was not a top performer, and perhaps harbored resentment due to his lack of upward mobility.  Obviously not able to conclude that definitely, but after 12 years it's likely frustrating to be at the level he was in the organization. 

[JSArbitrage]

I think his seniority is relevant, because it provides a bit of context to his remarks.  The fact that he was not a Managing Director after 12 years implies that he was not a top performer, and perhaps harbored resentment due to his lack of upward mobility.  Obviously not able to conclude that definitely, but after 12 years it's likely frustrating to be at the level he was in the organization.

 

Or one could conclude that he wasn't promoted due to the fact that he takes offense to what counts as "top performance" at the firm, which was the entire basis of the article.  Maybe he wasn't willing to put "axes" on clients or "rip their faces off." (GS terminology.)

 

Interestingly, dealbook has interviews up from more former GS employees, most of whom confirm this article.  The only former GS employee that didn't validate his claims never actually said it wasn't true, he just said the guy was a loser for being VP for 12 years. 

 

 

[Guest Hester]

CNBC called the guy a "golden executive" at one point today.

[COYS]

"Or one could conclude that he wasn't promoted due to the fact that he takes offense to what counts as "top performance" at the firm, which was the entire basis of the article.  Maybe he wasn't willing to put "axes" on clients or "rip their faces off." (GS terminology.)"

 

Perhaps, but he was promoted through the ranks from analyst to associate to VP to ED which suggests he was viewed favorably enough for promotion, just not to MD. 

 

 

[Rabbitisrich]

If he wanted to puncture the image of GS always going for the jugular, then he should have provided some examples of GS turning down money for ethical reasons. Otherwise, you have a guy who squandered a Stanford education and a Rhodes scholarship on an investment banking career asserting that Goldman's "moral fiber" had changed since 2000. Isn't this the same institution that structured a lending arrangement with Greece to disguise the country's debt status, thus allowing it entry into the EU? This is the same company that regularly bribed county officials and influential citizens according to private JPM emails released through the Jefferson County suit.

[Grenville]

This is the same company that regularly bribed county officials and influential citizens according to private JPM emails released through the Jefferson County suit.

 

Hi Rabbit, do you have a link to those docs released in the suit?

[JSArbitrage]

This is the same company that regularly bribed county officials and influential citizens according to private JPM emails released through the Jefferson County suit.

 

Hi Rabbit, do you have a link to those docs released in the suit?

 

http://www.nakedcapitalism.com/2010/04/so-why-isnt-the-doj-after-jp-morgan-and-goldman-for-anti-competitive-behavior-jefferson-county-edition.html

[Rabbitisrich]

Thanks JSArbitrage. Also, Bond Girl on self-evident.org provides some of the best coverage of that affair: https://self-evident.org/?p=935

 

Check out the reference to "rival firm's purportedly successful tactics..." in the first link of the second paragraph. Goldman Sachs had a standing "consulting" arrangement with a local broker-dealer named Blount Parrish.

[Grenville]

Thanks JSArbitrage. Also, Bond Girl on self-evident.org provides some of the best coverage of that affair: https://self-evident.org/?p=935

 

Check out the reference to "rival firm's purportedly successful tactics..." in the first link of the second paragraph. Goldman Sachs had a standing "consulting" arrangement with a local broker-dealer named Blount Parrish.

 

Awesome. Thank you for the reference in the document.

 

Here's a direct link to the .pdf from the sec

http://www.sec.gov/litigation/complaints/2009/comp21280.pdf

 

Here's the other one:

http://www.sec.gov/litigation/complaints/2008/comp20545.pdf

[Guest Hester]

What you've all been waiting for for so long,

Whitney Tilson's thoughts on the GS memo:

 

http://www.gurufocus.com/news/168063/whitney-tilsons-thoughts-on-the-why-im-leaving-goldman-sachs-memo

[txlaw]

"Why I am leaving the Empire" - by Darth Vader

 

http://www.thedailymash.co.uk/index.php?option=com_content&task=view&id=5007&Itemid=81

[Kraven]

I think his seniority is relevant, because it provides a bit of context to his remarks.  The fact that he was not a Managing Director after 12 years implies that he was not a top performer, and perhaps harbored resentment due to his lack of upward mobility.  Obviously not able to conclude that definitely, but after 12 years it's likely frustrating to be at the level he was in the organization.

 

Or one could conclude that he wasn't promoted due to the fact that he takes offense to what counts as "top performance" at the firm, which was the entire basis of the article.  Maybe he wasn't willing to put "axes" on clients or "rip their faces off." (GS terminology.)

 

Interestingly, dealbook has interviews up from more former GS employees, most of whom confirm this article.  The only former GS employee that didn't validate his claims never actually said it wasn't true, he just said the guy was a loser for being VP for 12 years.

 

So you are going to believe that after 12 years of working at GS, making very good money, he simply decided he just couldn't take it anymore?  It took 12 years to figure that out?  Perhaps one could say better later than never, but isn't it equally plausible that he simply is looking for payback for slow or no promotion?  His seniority is incredibly relevant.  What if a district manager at Wal-Mart who covers 10 stores in his area came out with complaints about the company?  Would that be taken as the gospel?  This guy is the equivalent of a midlevel manager.  His biggest claim was he was in the recruiting video or something like that.  Basically that means he looked non-threatening and had a nice smile and was willing to do it.

 

Bankers at places like GS have all decided to make their deal with the devil in one way or another.  They either make their peace with it or leave.  There is nothing new under the sun though.  Ripping people's faces off isn't a GS thing, it's a banker thing and has been around for a very long time.  Everytime it comes out that people say it, it's made to seem as if it's new.  Go back and look at the Bankers Trust derivatives case from almost 20 years ago already.  They too "ripped" people's faces off and there was outrage about that. 

 

Most bankers are relatively decent people who want to make money.  Nothing wrong with that at all.  Most want to do the right thing by their clients if only because that ensures repeat business.  The people I knew used to try and bend over backwards to help their cleints.  It wasn't because they were saints, but they did want more business. 

[JSArbitrage]

I think his seniority is relevant, because it provides a bit of context to his remarks.  The fact that he was not a Managing Director after 12 years implies that he was not a top performer, and perhaps harbored resentment due to his lack of upward mobility.  Obviously not able to conclude that definitely, but after 12 years it's likely frustrating to be at the level he was in the organization.

 

Or one could conclude that he wasn't promoted due to the fact that he takes offense to what counts as "top performance" at the firm, which was the entire basis of the article.  Maybe he wasn't willing to put "axes" on clients or "rip their faces off." (GS terminology.)

 

Interestingly, dealbook has interviews up from more former GS employees, most of whom confirm this article.  The only former GS employee that didn't validate his claims never actually said it wasn't true, he just said the guy was a loser for being VP for 12 years.

 

So you are going to believe that after 12 years of working at GS, making very good money, he simply decided he just couldn't take it anymore?  It took 12 years to figure that out?  Perhaps one could say better later than never, but isn't it equally plausible that he simply is looking for payback for slow or no promotion?  His seniority is incredibly relevant.

 

Again, I don't understand the relevance of this. Even if we assume that his nay-sayers are right, he wasn't good at his job, he wasn't very high on the totem-pole, etc.  that isn't relevant.  What's relevant is whether what he says is true or not.  You can ad hominem him all day long.  The facts are these: many former GS employees (not just him) have said and the last decade or so have shown that Goldman screws their clients for their own gain.  They literally paid a $550M fine for telling their clients that their interests were aligned on a security sale, and then secret bet against the security they sold.  A security that was *designed* to implode. 

 

In short, you can say he is a nobody at Goldman; you can say he is upset about slow or no promotion; you can say he was there for more than a decade cashing his paycheck and bonuses when times were good.  But what you aren't saying, I've noticed, is that he is wrong.

 

This is nothing against Goldman alone; I think this can be applied to most bulge-bracket investment banks.  But this is the result of (a) near zero effective regulation and prosecution of Wall Street over the past 20 years, (b) trading being more profitable than iBanking.  So if you lose a iBanking client because you made $500M selling them crappy securities, what do you care? It would take 20 years of iBanking fees from one client to make that kind of money.

 

 

 

[AZ_Value]

 

In short, you can say he is a nobody at Goldman; you can say he is upset about slow or no promotion; you can say he was there for more than a decade cashing his paycheck and bonuses when times were good.  But what you aren't saying, I've noticed, is that he is wrong.

 

 

 

Amen!

 

JSArbitrage is right IMO. Can we at least spend some time discussing the substance of what that guy wrote and not his rank?

 

Do you guys think that a firm that forgets its duty towards clients needs is bound to auto destroy eventually?

 

Personally, when I read that part where he talks about attending meetings to discuss some derivatives and Goldman's clients were never mentioned, it made me think of an interview with Jamie Dimon (can't remember when or where) where he was discussing SIVs and why JPM never got caught into the SIVs frenzy that came close to sinking Citi completely, and Jamie said he just asked "How are these things serving any clients needs?" and when he figured out that they weren't, he decided that JPM wouldn't get involved.

[onyx1]

 

In short, you can say he is a nobody at Goldman; you can say he is upset about slow or no promotion; you can say he was there for more than a decade cashing his paycheck and bonuses when times were good.  But what you aren't saying, I've noticed, is that he is wrong.

 

 

 

Amen!

 

JSArbitrage is right IMO. Can we at least spend some time discussing the substance of what that guy wrote and not his rank?

 

Do you guys think that a firm that forgets its duty towards clients needs is bound to auto destroy eventually?

 

 

What "duty" are you assuming?  GS is not a fiduciary!  To assume so in a trading context is gravely naive and potentially career ending.

 

Regarding the author's contention, what is there to discuss?  Of course GS is in business to make money for themselves, first and foremost.  Despite suggestions from politicians, the media, and naive junior ex-employees, this is not immoral or illegal.  They provide live two-way markets and respond to reverse inquiry.  This alone is very valuable information and serves clients.  Institutional clients have a free to option respond to or ignore any trade. 

 

I was a client of GS for two decades and never had a significant issue in my dealings with them (or their competitiors) because I accepted these basic facts. 

 

[cwericb]

It seems this debate boils down to a single issue.

 

Do Goldman’s employees have an ethical responsibility to their clients or is their only responsibility to Goldman’s bottom line?

 

But clients pay Goldman, and thereby Goldman’s employee’s, to look after the client’s best interests, not Goldman’s interests.

 

I guess I am old school but I believe that if you accept money to perform a service you have an ethical responsibility to perform that service to the best of your ability.

 

When you take your car to the garage, is it okay for the garage mechanic to slap on numerous unnecessary parts and repairs to boost the garage’s profitability?

 

Just my 2 cents worth.

[Vish_ram]

not quite, and also strap explosives to the same car, buy life insurance on the occupants, watch it explode & collect the insurance $. (was it Taibbi who gave this analogy?)

 

I've long believed that there are only two kinds of people in wall street. Those who do fraud, and those who didn't have the opportunity to do fraud. With all this, this country has managed to be relatively stable, highest GDP in world, a birth place of innovation etc. Very strange indeed.

 

It seems this debate boils down to a single issue.

 

Do Goldman’s employees have an ethical responsibility to their clients or is their only responsibility to Goldman’s bottom line?

 

But clients pay Goldman, and thereby Goldman’s employee’s, to look after the client’s best interests, not Goldman’s interests.

 

I guess I am old school but I believe that if you accept money to perform a service you have an ethical responsibility to perform that service to the best of your ability.

 

When you take your car to the garage, is it okay for the garage mechanic to slap on numerous unnecessary parts and repairs to boost the garage’s profitability?

 

Just my 2 cents worth.