By Pam Martens: October 23, 2012
Yesterday, a reporter at a mainstream media outlet ran the following sentence in her coverage of Greg Smith, the Goldman Sachs Vice President who resigned in March via an oped in the New York Times charging the firm with a corrupt environment: “Smith is the first former employee to write a critical account of his career at New York-
I wrote to the reporter and the editor of the piece requesting a correction, alerting them that a highly respected former managing director of Goldman Sachs, Nomi Prins, had specifically attributed leaving a 15-year career on Wall Street to one firm’s hubris — Goldman Sachs. I included this passage from Prins’ 2004 book, Other People’s Money: The Corporate Mugging of America:
“When I left Wall Street, at the height of a wave of scandals uncovering scores of massively destructive deceptions, my choice was based on a very personal sense of right and wrong…So, when people who didn’t know me very well asked me why I left the banking industry after a fifteen-year climb up the corporate ladder, I answered, ‘Goldman Sachs.’
“For it was not until I reached the inner sanctum of this autocratic and hypocritical organization – one too conceited to have its name or logo visible from the sidewalk of its 85 Broad Street headquarters [now relocated to 200 West Street] that I realized I had to get out…The fact that my decision coincided with corporate malfeasance of epic proportions made me realize that it was far more important to use my knowledge to be part of the solution than to continue being part of the problem.”
The media outlet ran a correction of sorts but it failed dramatically in capturing the essence of the relevancy of this information to the Greg Smith story. That is, within a span of eight years, two highly paid executives of Goldman Sachs gave up their Wall Street careers because of Goldman Sachs’ culture and a genuine desire to change that culture for the good of both Wall Street and the country.
Since at least 1989, well written narratives from executives emerging from Wall Street have depicted a thoroughly corrupt model in critical need of reform. What Congress delivered to America was the exact opposite – looser regulation with a corresponding rise in corruption.
Michael Lewis wrote about his tenure at investment bank Salomon Brothers in the 1989 bestseller Liar’s Poker. According to Lewis, “It was assumed that I might well put a customer or two out of business. That was part of being a geek. There was a quaint expression when a customer went under. He was said to have been ‘blown up.’ ”
In his 1997 bestseller, F.I.A.S.C.O. – Blood in the Water on Wall Street, Frank Partnoy gave a damning assessment of Wall Street powerhouse, Morgan Stanley, where Partnoy worked as a derivatives structurer: “…my ingenious bosses became feral multimillionaires: half geek, half wolf. When they weren’t performing complex computer calculations, they were screaming about how they were going to ‘rip someone’s face off’ or ‘blow someone up.’ Outside of work, they honed their killer instincts at private skeet-shooting clubs, on safaris and dove hunts in Africa and South America, and at the most important and appropriately named competitive event at Morgan Stanley: the Fixed Income Annual Sporting Clays Outing, F.I.A.S.C.O. for short. This annual skeet-shooting tournament set the mood for the firm’s barbarous approach to its clients’ increasing derivatives losses. After April 1994, when these losses began to increase, John Mack’s [President of Morgan Stanley] instructions were clear: ‘There’s blood in the water. Let’s go kill someone.’ ”
This web site is similarly dedicated to translating my 21 years of work in the belly of the beast into a wake up call for the American people and Congress. How many people does it take telling the same story to hit critical mass?
Goldman Sachs is now running a ruthless smear campaign against Greg Smith. Some in the media are gullibly serving as Goldman’s puppets, effectively replicating the role of Goldman’s muppet clients.
Sorting out truth from spin is quite easy in this matter: an industry based on fair dealing and sound business principles does not collapse as Wall Street did in 2008.