Today’s New York Times Op-Ed page opened with a scathing criticism of the environment at Goldman Sachs, delivered by none other than one of their own. Greg Smith, executive director and head of the firm’s United States equity derivatives business in Europe, the Middle East and Africa, officially handed in his resignation today, via the editorial. His reason—a culture shift at Goldman Sachs where client interests routinely take a backseat to firm profits.
According to Smith, the environment at Goldman Sachs has eroded to such a point, he notes that, “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.”
As of late, more of the titans of finance have taken to combating negative perceptions of Wall Street and publicly commenting on their approaches to the markets and life, in general.
But the musings of the heads of finance took a backseat to the press given to a recent article in CFA Magazine referencing research that one out of every 10 Wall Street employees might be a psychopath.
Certainly, that portrayal isn’t good for anyone on the Street. But Smith’s comments in the Times just may be, says Rick Gilkey, an associate professor of clinical psychiatry at Emory University’s School of Medicine, as well as a professor of organization and management at Emory University’s Goizueta Business School.
In an interview with eFinancialCareers, Gilkey says that a public airing could be what Wall Street needs. He says that not only do the clients’ needs suffer in this sort of environment, so too does the psyche and condition of employees at these firms.
“The bright news could be that this will precipitate a crisis where there’s more introspection,” he adds. Or, says Gilkey, it could be more of the same, with firms choosing to use public relations and corporate-sponsored programs to hail their good works.
“Issues of fairness and social equity and how we think about people needs to be discussed,” he says. “We need to create more humane environments at work, and there could be a good outcome to this.” For professionals currently working on Wall Street, and for those looking to get back to a post there, Gilkey says they may be questioning their career path. “Isolation at the top can make people lose perspective, and they end up creating their own moral code. That moral code is often contagious.”
In the UK, Greg Smith is being portrayed as a “folk hero.” The executive director of Goldman’s ‘US EMEA equity derivatives business’ is being lauded as honest, courageous and a role model for students after printing his resignation letter in the Times and claiming the firm has become interested in nothing more than making money for itself, regardless of the implication for its clients.
Smith’s accusations have not been commented upon in detail by Goldman Sachs. Lawyers point out that the New York Times appears to think they’re true, otherwise the paper could vulnerable to being sued for libel.