LONDON/NEW YORK, (Reuters) – Goldman Sachs faced an unprecedented assault from one of its own yesterday after a banker published a withering resignation letter in the New York Times, calling the Wall Street titan a “toxic” place where managing directors referred to their own clients as “muppets.”
It was the latest blow for the investment bank. The company — dubbed a “great vampire squid” in a 2009 article in Rolling Stone magazine — has been embroiled in the biggest-ever insider trading scandal on Wall Street. And just weeks ago, a top judge criticized Goldman for big conflicts of interest in an energy deal.
In an opinion column in Wednesday’s Times, Greg Smith, who worked in equity derivatives, said Goldman had become “as toxic and destructive as I have ever seen it.
“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,’“ Smith said.
In the United States “muppet” brings to mind lovable puppets like Kermit the Frog, but in Britain, “muppet” is slang for a stupid person. (Goldman, as it happens, was at one time also the bank for the family of Muppets creator Jim Henson.)
Goldman Sachs issued a short statement in response:
“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.”
In a memo to staff, Goldman Chief Executive Lloyd Blankfein and Chief Operating Officer Gary Cohn said Smith’s views were in the minority among his 12,000 fellow vice presidents.
“And, what do our people think about how we interact with our clients? Across the firm at all levels, 89 percent of you said that the firm provides exceptional service to them,” they said in the memo, a copy of which was reviewed by Reuters.
Congressman Barney Frank, an architect of the 2010 Dodd-Frank financial reform law, said Smith’s piece would have “a big impact” on the banking industry’s efforts to push back against financial reform.
“It puts the burden on Goldman Sachs and others to show us how what they do benefits the clients and therefore the broader economy,” he told Reuters.
