Greg Smith’s NY Times Op-Ed Cost Goldman Sachs $2.2 Billion for Shareholders

Christine Harper reports on Bloomberg:

Goldman Sachs Group Inc. saw $2.15 billion of its market value wiped out after an employee assailed Chief Executive Officer Lloyd C. Blankfein’s management and the firm’s treatment of clients, sparking debate across Wall Street.

The shares dropped 3.4 percent in New York trading yesterday, the third-biggest decline in the 81-company Standard & Poor’s 500 Financials Index, after London-based Greg Smith made the accusations in a New York Times op-ed piece.

Smith, who also wrote that he was quitting after 12 years at the company, blamed Blankfein, 57, and President Gary D. Cohn, 51, for a “decline in the firm’s moral fiber.” They responded in a memo to current and former employees, saying that Smith’s assertions don’t reflect the firm’s values, culture or “how the vast majority of people at Goldman Sachs think about the firm and the work it does on behalf of our clients.”

Former Federal Reserve Chairman Paul Volcker, 84, whose “Volcker rule” would limit banks like New York-based Goldman Sachs from making bets with their own money, called Smith’s article “a radical, strong” piece. “I’m afraid it’s a business that leads to a lot of conflicts of interest,” Volcker said at a conference in Washington sponsored by the Atlantic magazine …

Read More: Bloomberg

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  • Andrew

    Finance capitalism is a delusion.

    • Disinfo_censors_dissent

       Marxist economics are a delusion.

      >”[T]there
      is no major premise, doctrine, or tool of analysis in economics today
      that derived from the writings of Karl Marx.” ~~ Thomas Sowell, On
      Classical Economics, Yale University Press 2006, p. 186

      • Andrew

        And saying that nothing in modern economics comes from Marx is supposed to make Marx look bad?

      • Haystack

        I was wondering what ever happened to the Thomas Sowell quoting guy. 

        • Andrew

          I suspected Disinfo_censors_dissent was CerebralCaustic’s new pseudonym.

      • Harryheck

        so, based on your insistence that “thomas sowell” is correct: just because those theorists who adhere to (and possess as their “own”) the reified reality–manufactured to reflect the imperatives of the “commodity form”–reject marx’s insight and criticism as legitimate, then they must “be right” in their assessment of both their treatment of marxism and their exultation of the capitalist order?

    • Harryheck

       you’re close in your assessment; finance capital is a human-constructed illusion that we’ve allowed to dictate our lives.  in other words, finance capital (and capitalism proper) is a human creation, but human beings have forgotten that we’ve created it.  instead of using our creation as we see fit, we conform (objectification through a continuous process of reification) to the imperatives dictated by capitalism and finance capital.  rather than direct our own existence (and species), we let our creation run amok.  the object that we’ve created has become the subjective force of reality, thereby forcing the role of the “object” on human beings.  we are used, instead of using what we’ve manufactured.

      comprehending this is essential to see past the veil of reification.  thus, the problems and structural antagonisms no longer appear out of human control.  things such as “the stock market,” “government debt,” “personal debt,” “student loans,” etc. lose their meaning (that we’ve attributed) as “eternal” and “natural.”  anything is possible, but first we must realize the full implications and power (the potential) that lies within human activity.  we must realize that the “second nature” created by the commodity form and capitalism is nothing more than “bullshit.”  we must comprehend and accept one basic premise: human beings are the makers of history.  there is no reason to inhibit human development and to limit to future potential of our species because of “debt” or “wages.”  we have the potential (limited by the interests of “profit”; restricted by the demand to keep prices high) to enhance and improve technology, to develop a fuller automatized process of production so that (1) human needs are easier to satisfy and (2) the amount of necessary labor be reduced.  the only reason why the 40 hour work week exists is to increase the amount tasks fulfilled and products created/sold.  it has nothing to do with the worker and has everything to do with the capitalist: working to satisfy the basic needs of society doesn’t leave room for profit.

      i’ve likely run off on a tangent.  check out georg lukács’s ‘history and class consciousness,’ particularly the essay contained therein: “reification and the consciousness of the proletariat.”  it is challenging, but it literally frees your mind.

  • Tyler Durden

    Some legislator has already been handed a bill that will prevent former employees from saying anything negative about their employer. All in the name of protecting ‘common’ shareholders, of course.

    • Liam_McGonagle

      That’s interesting.  But as they’ve already got all these non-disparagement clauses in the employment contracts of anyone with a story worth listening to, I think any new legislation would likely be just an embarrassingly ineffective bluff anyhow.

      Assuming that would withstand legal challenge anyhow.  The government seems unlikely to point-blank surrender its ability to compel testimony, even from its closest friends.  As Smith’s defection shows, there’s still a bit of elbow shoving going on, even near the highest ranks of these orgs.  There’s just enough room for internecine conflict to derail an effective conspiracy by government and corporate elites on this specific issue.

      Quite likely Smith was the person who suffered the most significant, permanent loss on this deal.  His violation of his employment contract may be sustainable cause to withhold a good chunk of his stock-based “Fuck You” money.

      As for the ephemeral market hit Goldman took from this, I don’t see it adding up to much.  Maybe competitors can build on this, but assuming Goldman maintains a PR machine of any effectiveness among the fat ticks that comprise it’s “premium customer base”, I don’t think they have much to worry about.

      These losses, for the most part are only temporary, paper losses.  Unless you happen to be one of the statistically negligible # of holders executing a major sale within two weeks of yesterday, my guess is that the market’s fantasy machine will bring prices back up to where they were before.

      Still, I found this article interesting.  It suggests that a cultural shift may be afoot, and banksters may not seem all that shiny-kewl anymore to young hipsters:

      http://dealbook.nytimes.com/2012/03/15/wall-streets-latest-recruiting-crisis-on-campuses/?hp

  • Nunzio X

    [insert "sad trombone" .wav file HERE]

  • Gergith

    I think GS deserves a 2.15 billion dollar bail out on account of this Greg Smith fiasco. [End trolling]

  • Haystack

    …and this didn’t happen in some bizarre parallel universe where corporations actually face tangible repercussions for their reprehensible behavior? 

    • Disinfo_censors_dissent

       Is that the same parallel universe where academics admit that Lenin was a butcher and all of Marx’s concepts have been falsified?

      • Haystack

        If the Disinformation Company banned you, shouldn’t you be a good capitalist and respect their property rights? 

      • http://twitter.com/anarcho anarcho
      • sonicbphuct

         academics -> economics -> agriculture?
        Are you now stating that Marx was right and we all got the edited version; lo, surely you’re not saying that our Neo-Liberal Capitalist Indoctrination system got Marx all wrong? And when did Lenin work at Agriprocessors in Iowa? I thought that was only undocumented latin-american workers, underage to boot, who were taking advantage of the free market system to provide lower cost labor, in the face of undue government regulations. What a strange parallel universe it is!

  • http://www.ContraControl.com/ Zenc

     If I were only slightly more cynical, I’d be one of the people who thinks this whole thing is just a way for Goldman to “short” their own stock for a quick profit or maybe to pad out their treasury stock at a discount.

  • no-one

    `…saying that Smith’s assertions don’t reflect the firm’s values, culture
    or “how the vast majority of people at Goldman Sachs think about the
    firm and the work it does on behalf of our clients.” ‘

    I know I’m misinterpreting this quote, but I think that’s the whole problem. “No, no! We’re not going soft! We still love to rip off our customers!”
    Customers are not necessarily shareholders. It would be interesting to see how much overlap there is, if that information is publicly available.