An Analysis of the Disgruntled Goldman Sachs Employee
The furor associated with disclosures by a former mid-level executive of a major investment bank has gone viral. Why the naïve and overstated observations of such a person were elevated to this extent by a prestigious newspaper and so many news outlets deserves to be analyzed.
Many Americans have been brainwashed about the role of Wall Street as the sole group responsible for the recession. Sure, Wall Street is culpable for some questionable transactions that contributed to the housing bubble, but Congress, commercial banks, mortgage brokers and thousands of borrowers who falsified loan documents were equally guilty.
The media and liberal politicians have painted a target on Wall Street to further their assault on the affluent in this country with biased and unfair reporting and kangaroo hearings. Sadly, the public has swallowed all the twisted facts hook, line and sinker. And so, the public now devours and revels in the misfortunes of Wall Street firms.
There is really nothing that the public relations staffs of Wall Street firms can do to fight this tsunami of public opinion. It probably makes little sense for the firm accused of sophomoric trading floor banter and a desire to earn profits for its stockholders to respond aggressively; no one will listen to the explanations.
But, it is worthwhile to examine what the accuser has said about his former employer, his possible motivations for writing the Op-ed piece and the diligence employed by the newspaper that published the letter of resignation.
The accuser has been identified as an executive director at his former firm. This designation is relatively junior and deeply subordinated to the managing directors and partners at the investment bank. Therefore, it is safe to assume that the accuser had minimal managerial responsibilities and virtually no impact on developing business or cultural strategies for the firm. Whatever he knew was limited to the group he served in, an esoteric derivatives function.
The accuser has written that members of his former department spent much less time considering the needs of clients than the time spent deceiving clients to earn higher profits. Client relationships and earning money are inextricably related to each other; so, you cannot do the latter without focusing on the former.
The accuser wrote that his colleagues called clients derogatory names, like “muppets.” Anyone who has spent time on a trading floor knows that “wise ass” and foolish characterizations by traders is commonplace. Clients represent the Holy Grail of the banking business. Without them and their loyalty, a firm cannot be profitable.
But the most important and underreported item is that the accuser never saw his former colleagues break the law.
To this point, it appears that nobody, including the newspaper that published the letter, has investigated why the accuser went public. It seems to me this is a critical issue- to determine the accuser’s motivations.
Here are some of the facts reported to date. The accuser graduated from Stanford University over a decade ago. He was an executive director after all this time, so he was not on a fast track at the firm. He had limited responsibilities in a very large department and probably was not earning significant compensation, by Wall Street standards.
Is it possible the accuser was disgruntled? He had an amazingly huge audience to reveal illegal behavior (as a whistleblower), but did not, or could not. So, what’s the real reason for his decision to go public? A deductive person could very easily conclude that perhaps, money, power and title played an important role in the accuser’s decision to come out.
And finally, was the newspaper so excited about taking a cheap shot at this Wall Street firm that it failed to do proper due diligence? Seems to me that the person who approved the op-ed was in a rush to make a big splash and did not live up to the paper’s high journalistic standards, or should the paper’s performance be labeled shabby journalism in this case?
The general public does not fully appreciate what happens on Wall Street or what investment banks do every day. It is an industry driven by money, money to grow companies and money to receive as compensation for success. It is no secret that the fees paid by clients for value added service have been more than compensatory for decades.
Yet, the clients are just as savvy as the bankers, so institutional transactions rarely involve one party taking advantage of another. Investment banks facilitate trade and are critical to every large company in the world. Their success accrues to the health of the global economy. It is not in America’s best interests to see them struggle or be unfairly flayed by reporters anxious for a scoop.
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