It must be every boss’ worst nightmare: to receive an employee’s resignation letter on the Op-Ed page of The New York Times. And so Goldman Sachs CEO Lloyd Blankfein could be excused for suspending his efforts doing “God’s work” for a few moments as he lamented reading Greg Smith’s very public letter of resignation, called “Why I Am Leaving Goldman Sachs” in Wednesday’s Gray Lady.
First he was probably wondering, “who is this Greg Smith?” Though Smith has an impressive job title, “executive director and head of the firm’s United States equity derivatives business in Europe, the Middle East and Africa,” as The Times put it in his bio–Goldman Sachs has some 30,000 employees and nothing Smith wrote about in his op-ed conveyed the sense that he was especially important at the firm.
In fact, from the biographical details Smith includes, one gets the sense he is in his early 30s and his responsibilities have included recruiting and mentoring college kids for the firm’s internship program. Smith brags that his clients have a total asset base in excess of a trillion dollars, but at Goldman Sachs it doesn’t take too many clients to reach sums in the trillions.
The nub of Smith’s complaint is that “the interests of the client continue to be sidelined” in deference to “whatever will bring the biggest profit” to the firm. And this vexes the moral principles of the young man: “Call me old-fashioned, but I don’t like selling my clients a product that is wrong for them.”
Indeed, it is unethical to sell products that are unsuitable. There are serious ethical questions about selling even suitable products. Why stop at merely suitable products when there is a best product to meet a client’s need? But while Smith pays lip service to moral principles, what he is really doing in his letter is preening about his conscience in a way that is sure to damage the reputation of the firm that has provided him highly compensated employment for 12 years while probably setting him up for a book deal or movie of the lucrative “kiss-and-tell” variety.
That’s the only way to read this letter–even if his allegations about Goldman are true. His letter, while exhibiting enough salaciousness to make a Times editor drool–“Today, if you make enough money for the firm (and are not currently an ax murderer) you will be promoted into a position of influence”–has no real substance even while it is larded with clichés and juvenile turns of phrase (“Call me old-fashioned…” “I mean, come on.” “It just doesn’t feel right to me anymore.”)
Smith himself admits, “I don’t know of any illegal behavior,” so his main problem is the money-loving culture at the firm. While not unusual for a financial firm, it could indeed, if true, lead to the firm’s demise if it loses the trust of its clients, as Smith argues. And if Goldman’s clients didn’t suffer from a lack of trust, his op-ed will certainly get them to question the firm now, so Smith is unethically interfering in the livelihood of 30,000 Goldman employees.
Smith decries the absence of moral leadership at Goldman Sachs, but he had an opportunity to model that leadership himself. As an executive director, he could have made sure those working under him understood that the client’s interest always had to come first. He could also have brought his moral concerns to those working above him. These are difficult things to do, but those with moral courage must do them. Without first taking these steps, and without an immediate and objective threat to Goldman clients, Smith had no business blackening the reputation of Goldman Sachs and its employees.