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Cramer: Goldman Sachs Used to Put Clients First

The Goldman Sachs (GS - Get Report), Jim Cramer remembers working for put the client first at all costs. But after Greg Smith's resignation letter, Cramer questions how much of that culture still exists at the investment bank.

The company has received bad press over the years, alleging that it took positions in derivatives that bet against its clients in some instances. Cramer said there have been too many of these stories to continue to believe it is a conspiracy against the company.

"Taking one side of the trade. Favoring one client by picking some bad mortgages vs. another. And these are bad things. Ok. They're just bad things and we are not going to try to equivocate and we are not going to try to come up with rationalizations. They are just not as good. There are ways to make a lot more money," Cramer said.

As traditional profit streams from IPOs and stock trading wan, Cramer said investment banks are relying more on derivatives, where costs to the client are hidden. This also allows the investment bank to protect itself on the upside and make a lot of money, particularly if it doesn't hold the same position as the client.

"They are proprietary products that don't really trade away so let's say you can take 2 points. In other words, you know if it's something you sell at par, it's really worth 98 and the customer is down immediately and the customer doesn't really realize it and they don't really understand it and you can buffalo people and sell them a lot of derivatives and say that interest rates are down a lot," Cramer said.

As a public company, Goldman Sachs faces more pressure to grow earnings than a private partnership, Cramer said. As other areas of revenue weaken, the company might have done things it shouldn't. But, Cramer said, he cannot continue to defend the company until it comes clean.

"What I don't like about this version of Goldman is that they are insisting that they never did anything that they shouldn't. And that's unrealistic. Too many clients have lost money. Too many stories have come out. They are not a vast conspiracy," he said.

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