By now, you have probably read, or at least heard about Greg Smith’s already infamous resignation essay he published in the New York Times this morning, on why he was resigning from investment bank Goldman Sachs. If you have missed the fun, you can read the letter here.
Goldman Sachs, of course, is notorious for being an exemplar of every kind of repugnant behavior that outsiders think of when they think of Wall Street. Merciless exploitation of clients. Testosterone-laden competitiveness. A profit drive that would make Gordon Gekko blush. Years ago, when Enron failed, the magazine where I worked published an op-ed that noted how those who work in the energy commodities markets have a higher tendency to display sociopathy than others. I have often wondered how that same litmus would apply to the financial services industry in general, Wall Street in particular, and Goldman Sachs in specific.
Meanwhile, the viral buzz on this letter has already been pretty impressive. There is already a Star Wars parody of the letter (Q: What’s the difference between Goldman Sachs and the Galactic Empire? One is a soul-crushing regime with the power to destroy planets. The other built the Death Star.) and there is a surging interest in a Twitter feed that purportedly quotes things overheard in the Goldman Sachs elevators that pretty much confirm every horrible thing you ever heard about the culture there.
There is even a rumor afoot that Goldman is imposing a three-year nondisparagement clause into new work agreements because of this. If that is so, my thought is…they waited until now to do this? One would think a company that high-profile would have taken such measures long before now.
I am reminded of an incident that happened a few months after I left my previous employer to join National Underwriter. On the eve of the annual budget meeting, somebody sent a long, scathing letter to every employee and member of the Board of my old company. It basically called for the ouster of the executive director, the deputy executive director and the head of HR, cataloging a bunch of complaints that had been often whispered by the rank and file, but never uttered so publicly. The day it landed, I started getting all of these e-mails from people either congratulating me for tearing the company a new one, or asking me if I was the author. I had not written the letter, however. I didn’t even know about it, and every time I asked somebody to send me a copy, they’d decline, citing concerns that they would be fired if it got traced back to them. Eventually I did read a copy, and the letter was pretty harsh. But I really had nothing to do with it.
What hurt was the degree to which my old bosses thought that I did, though. Never mind that if they had ever bothered to actually read my material, they would have known I did not write the letter, since it was a) not in my style and b) I simply have too much ego to write anything anonymously. Even when I called them to defuse the rumor, they politely blew me off. I later learned that one of my old bosses went so far as to tear up a copy of one of my novels I had given her. Another put my name on the “do not admit” list to the security guys downstairs, I was told.
In the end, I let it all go, since it didn’t really matter. Those who really knew me quickly realized that I did not write the letter, and one colleague bravely defended me to my bosses, a move that I will never forget. And for all of the furious reaction to the letter, I learned that it did prompt an improvement in conditions. The company brought in consultants to address staff concerns, and some folks have told me things have indeed improved there.
I don’t know if Greg Smith’s letter will really get anything accomplished at Goldman. From what I hear, the place is a real snakepit, and this could be as much the screed of a guy who didn’t make partner as much as one from a guy who realized that the closer he got to the top of the organization, the worse the smell became. Corporate culture can be a terribly insular thing, especially among Wall Street firms, and it will probably take more than an op-ed in the New York Times to prompt the change Goldman seems to need so desperately.
Or maybe not. Maybe a legislator will read this and decide enough is enough and make the firm’s life a living regulatory hell until there is a house cleaning. I would have thought such a thing impossible, if the NAIC had not been called onto the carpet by Rep. Ed Royce (R-Calif.) after he read a National Underwriter article on the group’s self-declaration as a “standard-setting” organization. So anything is possible, even the piercing of a supposedly untouchable culture by a single spleen-venting. If nothing else, this shows the power of social media, especially when cross-referenced against a powerful and public corporate interest that is already the subject of pretty seriously negative public perception, and an internal sense that such perception probably isn’t worth dealing with. I have come across numerous insurers that, while not the same cauldron of alpha behavior that Goldman seems to be, feel the same way about their relationship with a skeptical public.
Only time will tell if Goldman Sachs really gets shaken up by all of this. But what an interesting time it will be. Let this letter, and whatever else comes from it be a cautionary tale for any financial services firm that doubts the ability for the public to quickly unite in its criticism…and for even more lasting changes to come from it.