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发帖数: 7948 | 1 http://www.nytimes.com/2012/03/15/business/a-public-exit-from-g
March 14, 2012
A Public Exit From Goldman Sachs Hits at a Wounded Wall StreetBy NELSON D.
SCHWARTZ
Wall Street traders come and go all the time, but few have quit with the
flair of Greg Smith. The way he resigned from Goldman Sachs, and what he had
to say, could reignite a debate over how much Wall Street has changed in
the wake of the financial crisis.
Very little, he said in an Op-Ed column in The New York Times on Wednesday.
Mr. Smith, a London-based executive director for Goldman Sachs overseeing
equity derivatives, decried a drastic change in culture at the firm since he
joined it 12 years ago, with profits now coming before the interest of
clients who, he wrote, are often derided as “muppets” by people at Goldman
.
Mr. Smith is saying publicly what others whisper privately, which is why his
cri de coeur may be so provocative. Even on Wall Street — where making
money is good, and making more money is better — a few shibboleths still
command respect, including the one that the customer should come first, or
at least second, not dead last. Since the financial crisis, in fact, nearly
all the big banks have claimed to be client-centric as they seek to rebuild
public trust.
At meetings at Goldman, on the other hand, “not one single minute is spent
asking questions about how we can help clients,” Mr. Smith wrote. “It’s
purely about how we can make the most possible money off of them. If you
were an alien from Mars and sat in on one of these meetings, you would
believe that a client’s success or progress was not part of the thought
process at all.”
“People who care only about making money will not sustain this firm — or
the trust of its clients — for very much longer,” warned Mr. Smith, whose
biography page traces his time with the firm in New York and Europe.
A Goldman Sachs spokesman responded to the piece early Wednesday: “We
disagree with the views expressed, which we don’t think reflect the way we
run our business. In our view, we will only be successful if our clients are
successful. This fundamental truth lies at the heart of how we conduct
ourselves.”
Mr. Smith’s criticism, much more than stories about bonuses or brickbats
from the likes of Occupy Wall Street, could be especially painful for Wall
Street now. Memories are still fresh of the Securities and Exchange
Commission lawsuit filed in April 2010 accusing Goldman of fraud, after it
sold clients complicated mortgage backed securities that later soured, and
never mentioned that it had bet against them.
The parade of senior Goldman executives who testified before Congress after
the case arose seemed to put a public face on what had been a broader sense
of distrust of Wall Street in the aftermath of the financial crisis,
focusing ever more attention on a firm whose patriarchs had been adamant
about having high standards.
Wall Street, of course, has always sought profits — but if greed were to be
countenanced, it should be long-term greed, not short-term greed, in the
words of Gus Levy, who led Goldman Sachs in the 1960s and ’70s. With long-
term greed, money was made with clients, not from them.
Veterans of Goldman and other top-tier firms say there was a time when long-
term greed was the order of the day, at least publicly, and it benefited
firms and their partners if not enormously, then certainly generously. But
over the last 25 years, as that incentive structure metamorphosed, longtime
bankers and scholars say, Wall Street has been remade in ways that Mr. Levy
would hardly recognize.
The shift in incentives has followed the evolution of the business itself,
industry insiders and other experts said. Partnerships, where the leaders of
the firm had their own fortunes on the line, became publicly-traded giants.
Proprietary trading evolved into a Midas-like source of money, challenging
investment banking and client relationships. And with a free hand thanks to
Washington, investment banks could take on ever more risk, amplified by debt
.
“When these firms changed from partnerships to public companies, the ethos
changed dramatically,” said Charles M. Elson, a professor of corporate
governance at the University of Delaware. “The notion of client loyalty
went out with the old structure. And as these became public companies,
clients looked for the cheapest deal, and the firms looked for as many
clients as possible.”
With the rapid growth of proprietary trading beginning the 1980s, as firms
used their own capital to make bets, a short-term mentality came to dominate
firms, according to Mr. Elson. “You make a much bigger buck on a
transaction than on the long-term relationship,” he said. “You have
profiteers as opposed to advisers.”
Compensation followed. Before 1990, pay for the chief executives of
financial firms were on par with those of chief executives of the largest
traded companies, or even slightly lower.
By 2005 the pay was roughly 250 percent bigger on average, said Ariell
Reshef, a professor of economics at the University of Virginia. Broadly
speaking, between 1980 and 2005, bonuses and salaries in finance increased
70 percent more than average pay elsewhere.
To be sure, longtime bankers say it is not like short-term greed was absent
in the past. It has been around since traders gathered under a buttonwood
tree and founded the New York Stock Exchange in 1792. But the astounding
size of Wall Street’s biggest firms — and the fortunes to be made — have
altered the calculus.
“I think there was plenty of skullduggery going on,” said Jerome Kohlberg
Jr., who worked at Bear Stearns for 21 years before leaving to found
Kohlberg Kravis Roberts in 1976 with Henry R. Kravis and George R. Roberts.
Still, the trend has accelerated in recent years, according to Mr. Kohlberg.
“When I first started on Wall Street, it was a small group and everyone
knew everyone else,” he said. “If you stepped out of line, people would
not do business with you.”
Not everyone agrees with Mr. Kohlberg’s view. Anticipating arguments that
are likely to be made in the coming days, one billionaire hedge fund manager
who insisted on anonymity argued that conflicts have always come with the
territory, and that clients should be sophisticated enough to know that. “
These aren’t dumb people,” he said.
The key, he said, is to anticipate the conflicts, and if need be, use them
to your advantage. “Find the one that has the biggest conflict and get him
on your side,” he said. “You want somebody who understands both sides.”
“The guy on both sides of the equation will find a deal to get the deal
done,” he added. “Is he getting his bread buttered on both sides? Who
cares. Just get the deal done.”
Wall Street could now pay a steep price for short-term thinking, experts
said, even if salaries and behavior have not caught up with public
disillusionment. Hemmed in by new regulations, the big banks are being
forced to give up proprietary trading. Fewer graduates of elite Ivy League
schools are flocking to careers in finance. And the anger is spreading, seen
not only in the Occupy Wall Street protests but also in the increasing
distrust among the most affluent consumers.
Over all, the percentage of people who have little or no faith in the
fairness of investment companies rose to 41 percent in 2011 from 26 percent
in 2008, according to Yankelovich Monitor 2011. Only credit card companies,
corporate chief executives, the federal government and lawyers fared worse.
Even banks and insurance companies did better.
Nor is the outrage a matter of populist revolt. The feelings were identical
in households whether they earned $100,000 or $50,000.
While Mr. Smith’s career at Goldman is over, he insisted it was not too
late for his former firm and the rest of Wall Street.
“Make the client the focal point of your business again,” he wrote. “
Without clients you will not make money. In fact, you will not exist. Weed
out the morally bankrupt people, no matter how much money they make for the
firm. And get the culture right again, so people want to work here for the
right reasons.” | w********2
发帖数: 16371 | 2 faint. GS will be infamous
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【在 k********8 的大作中提到】
: http://www.nytimes.com/2012/03/15/business/a-public-exit-from-g
: March 14, 2012
: A Public Exit From Goldman Sachs Hits at a Wounded Wall StreetBy NELSON D.
: SCHWARTZ
: Wall Street traders come and go all the time, but few have quit with the
: flair of Greg Smith. The way he resigned from Goldman Sachs, and what he had
: to say, could reignite a debate over how much Wall Street has changed in
: the wake of the financial crisis.
: Very little, he said in an Op-Ed column in The New York Times on Wednesday.
: Mr. Smith, a London-based executive director for Goldman Sachs overseeing
| k********8
发帖数: 7948 | 3 http://www.nytimes.com/2012/03/14/opinion/why-i-am-leaving-gold
Why I Am Leaving Goldman SachsBy GREG SMITH
TODAY is my last day at Goldman Sachs. After almost 12 years at the firm —
first as a summer intern while at Stanford, then in New York for 10 years,
and now in London — I believe I have worked here long enough to understand
the trajectory of its culture, its people and its identity. And I can
honestly say that the environment now is as toxic and destructive as I have
ever seen it.
To put the problem in the simplest terms, the interests of the client
continue to be sidelined in the way the firm operates and thinks about
making money. Goldman Sachs is one of the world’s largest and most
important investment banks and it is too integral to global finance to
continue to act this way. The firm has veered so far from the place I joined
right out of college that I can no longer in good conscience say that I
identify with what it stands for.
It might sound surprising to a skeptical public, but culture was always a
vital part of Goldman Sachs’s success. It revolved around teamwork,
integrity, a spirit of humility, and always doing right by our clients. The
culture was the secret sauce that made this place great and allowed us to
earn our clients’ trust for 143 years. It wasn’t just about making money;
this alone will not sustain a firm for so long. It had something to do with
pride and belief in the organization. I am sad to say that I look around
today and see virtually no trace of the culture that made me love working
for this firm for many years. I no longer have the pride, or the belief.
But this was not always the case. For more than a decade I recruited and
mentored candidates through our grueling interview process. I was selected
as one of 10 people (out of a firm of more than 30,000) to appear on our
recruiting video, which is played on every college campus we visit around
the world. In 2006 I managed the summer intern program in sales and trading
in New York for the 80 college students who made the cut, out of the
thousands who applied.
I knew it was time to leave when I realized I could no longer look students
in the eye and tell them what a great place this was to work.
When the history books are written about Goldman Sachs, they may reflect
that the current chief executive officer, Lloyd C. Blankfein, and the
president, Gary D. Cohn, lost hold of the firm’s culture on their watch. I
truly believe that this decline in the firm’s moral fiber represents the
single most serious threat to its long-run survival.
Over the course of my career I have had the privilege of advising two of the
largest hedge funds on the planet, five of the largest asset managers in
the United States, and three of the most prominent sovereign wealth funds in
the Middle East and Asia. My clients have a total asset base of more than a
trillion dollars. I have always taken a lot of pride in advising my clients
to do what I believe is right for them, even if it means less money for the
firm. This view is becoming increasingly unpopular at Goldman Sachs.
Another sign that it was time to leave.
How did we get here? The firm changed the way it thought about leadership.
Leadership used to be about ideas, setting an example and doing the right
thing. 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.
What are three quick ways to become a leader? a) Execute on the firm’s “
axes,” which is Goldman-speak for persuading your clients to invest in the
stocks or other products that we are trying to get rid of because they are
not seen as having a lot of potential profit. b) “Hunt Elephants.” In
English: get your clients — some of whom are sophisticated, and some of
whom aren’t — to trade whatever will bring the biggest profit to Goldman.
Call me old-fashioned, but I don’t like selling my clients a product that
is wrong for them. c) Find yourself sitting in a seat where your job is to
trade any illiquid, opaque product with a three-letter acronym.
Today, many of these leaders display a Goldman Sachs culture quotient of
exactly zero percent. I attend derivatives sales meetings where not one
single minute is spent asking questions about how we can help clients. It’s
purely about how we can make the most possible money off of them. If you
were an alien from Mars and sat in on one of these meetings, you would
believe that a client’s success or progress was not part of the thought
process at all.
It makes me ill how callously people talk about ripping their clients off.
Over the last 12 months I have seen five different managing directors refer
to their own clients as “muppets,” sometimes over internal e-mail. Even
after the S.E.C., Fabulous Fab, Abacus, God’s work, Carl Levin, Vampire
Squids? No humility? I mean, come on. Integrity? It is eroding. I don’t
know of any illegal behavior, but will people push the envelope and pitch
lucrative and complicated products to clients even if they are not the
simplest investments or the ones most directly aligned with the client’s
goals? Absolutely. Every day, in fact.
It astounds me how little senior management gets a basic truth: If clients
don’t trust you they will eventually stop doing business with you. It doesn
’t matter how smart you are.
These days, the most common question I get from junior analysts about
derivatives is, “How much money did we make off the client?” It bothers me
every time I hear it, because it is a clear reflection of what they are
observing from their leaders about the way they should behave. Now project
10 years into the future: You don’t have to be a rocket scientist to figure
out that the junior analyst sitting quietly in the corner of the room
hearing about “muppets,” “ripping eyeballs out” and “getting paid”
doesn’t exactly turn into a model citizen.
When I was a first-year analyst I didn’t know where the bathroom was, or
how to tie my shoelaces. I was taught to be concerned with learning the
ropes, finding out what a derivative was, understanding finance, getting to
know our clients and what motivated them, learning how they defined success
and what we could do to help them get there.
My proudest moments in life — getting a full scholarship to go from South
Africa to Stanford University, being selected as a Rhodes Scholar national
finalist, winning a bronze medal for table tennis at the Maccabiah Games in
Israel, known as the Jewish Olympics — have all come through hard work,
with no shortcuts. Goldman Sachs today has become too much about shortcuts
and not enough about achievement. It just doesn’t feel right to me anymore.
I hope this can be a wake-up call to the board of directors. Make the client
the focal point of your business again. Without clients you will not make
money. In fact, you will not exist. Weed out the morally bankrupt people, no
matter how much money they make for the firm. And get the culture right
again, so people want to work here for the right reasons. People who care
only about making money will not sustain this firm — or the trust of its
clients — for very much longer.
Greg Smith is resigning today as a Goldman Sachs executive director and head
of the firm’s United States equity derivatives business in Europe, the
Middle East and Africa. | c*****r
发帖数: 8227 | | k********8
发帖数: 7948 | 5 也不一定
还是会有好苹果的
我一开始觉得没人敢要Greg Smith了
现在我倒觉得Greg前途大好啊
因该会有不少公司抢着要他，或者他自己自立门户
不过谁知道GS和人家那些个客户的高层中间有什么勾当
到底是那些GS客户的股东是Muppets还是客户高层是Muppets还很难说 |
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