On March 14 Greg Smith publicly resigned as executive director of Goldman Sachs. In an
opinion piece that ran in the New York Times, Smith detailed his reasons for leaving the
investing giant, citing a decline in the company’s culture. According to Smith, when he began working for Goldman Sachs immediately after college, the company prided itself on camaraderie among team members and caring for clients. Since then, Smith says, the global leader has shifted to a profit-driven model and employed investors who demean their clients and manipulate sales. In protest, Smith has chosen to leave Goldman Sachs and very publicly let people know why.
Responses to Smith’s exposé have varied. Goldman Sachs shares fell by 3.4 percent following the piece, but many criticized Smith for his innocence in imagining that an investment bank cared more about customers than profit. Others questioned his choice to stay involved with a company he believed was on a moral slippery slope for so long.
We applaud Smith for his bravery in picking a fight with such an influential company.
After 12 years with Goldman Sachs, Smith is probably not struggling financially, but it is doubtful that he will ever be able to obtain a job in an investment bank again. Given his disdain for the culture, however, Smith is probably considering a career move anyway.
Smith’s decision to take a stand for integrity is inspiring. More important than Smith or even Goldman Sachs is the unfortunate trend American finances have taken. It would be truly naïve to assume that it is only Goldman Sachs executives who foster a culture of client manipulation and degradation. It may have been naïve for Smith to imagine an investment bank that cared about its customers, but it is not outside the realm of public power to demand that financial institutions start doing so.
If we are going to exercise public power, we might as well consider the integrity of all institutions. Take Congress, for example. Imagine a legislative body that functioned well and was composed of men and women of moral integrity.
It’s tough, we know.
Want a tougher scenario? How about insurance companies that did not deny people based on “pre-existing conditions” or charge women extra apparently just for being female. That’s what the South Florida Sun Sentinel reported in a story that said women pay up to 52 percent more for health insurance in Florida.
If businesses were truly based on customer satisfaction, consumerism would be completely revolutionized. In capitalism, it is the purchaser who has the power, so Americans must choose to spend their dollars (or votes, as it were) to communicate a value in integrity over profit.
The two are not mutually exclusive, but experience suggests that when profit is the primary focus, integrity is quickly lost. Greg Smith was a good wake-up call, but we must all make a conscious decision to reward institutions that do right by those they serve.