It's ironic that the op-ed came a day after the release of the Federal Reserve stress tests and a major rally in the banking sector, as some firms on life support just three years ago after the subprime meltdown announced major dividend hikes and share buybacks with the Fed's blessing.
Indeed, it's the market analysis of the latest Goldman negative headline that may say the most, and the 3% decline as many other banks rose, seems like the real damage. I don't think it's because of what Smith said, but rather the subtext.
"People who care only about making money will not sustain this firm -- or the trust of its clients -- for very much longer," he wrote.
The attack on Goldman's toxic culture designed only for making money also comes during a week when President Obama and the Congress are trying to push through a piece of legislation that will
erase investor protections
built up through decades and strengthened in the past decade in direct response to Enron and the dot.com bubble, a "jobs" act viewed by critics as doing the bidding of the banks and venture capitalists.
In the post-Vampire Squid era, with the bank ban on proprietary trading and the boring old world of commercial loans and mortgages back to being the bread-and-butter of the financial system, it's that much tougher for Goldman to do what it does best in gaming the constrained but still convoluted world of trading. That world is changing, but not enough to make a Buddhist of a capitalist, a member of the 1% a member of the 99%, or add even more tentacles to the Vampire Squid.
Consider this: One of the ironies of the Smith Goldman "dis" is that neither Warren Buffett, his compatriot in calling out Wall Street greed, or JPMorgan, Goldman Sachs' peer company, would likely hire him, the latter being an opinion expressed by
William Cohan on Tuesday, who called Smith "toast" as far as
of Wall Street is concerned.
Buffett is famous for deriding the same "toxic and destructive" nature of Wall Street called out by Smith, just not specifically when it comes to Goldman. Which one of them is right? The right answer might still be both of them, and it's just that Goldman's tentacles will always have the longest reach.
-- Written by Eric Rosenbaum from New York.
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